Carbon Rating Service
The Carbon Rating Agency has developed risk assessment tools to enhance the market transparency and transactional efficiency.
More detailed information on the Carbon Rating Agency can be found here.
One important output of this risk analysis is an independent opinion on the likely performance of an emission reduction project.
Our risk analysis is based on a combination of expert evaluation, a standardised and transparent risk analysis tool, and the input from a highly expert independent rating committee.
We service 3 main types of rating:
i. Mandated Ratings
The Carbon Rating Agency can undertake independent evaluation of any specified project on the basis of a formal request from a market participant
Mandated Ratings have the potential to deliver a range of benefits to the market participants, including:
Highlights
- An independent analysis of the risks in a project or portfolio, including benchmarking of the project activity or portfolio in relation to a peer group.
- Identification of those risks that are most material to the project or portfolio’s performance, enabling enhanced risk management.
- A stronger market position and enhanced leverage in price negotiations for credit and portfolio originators.
- Accelerated risk assessments, increased deal flow and enhanced accountability for buy-side participants.
- Enhanced transparency for Regulators.
Typical customers
Any market participant can formally request a Mandated Rating. A rating report of a project, portfolio or other carbon credit-based instrument may be of particular use to:
- Sell side players
- Carbon credit originators
- Project developers
Testimonials
- “The Carbon Rating Agency’s analysis is crucial to understand how the pCDM programme is intended to work and helps the reader to build an opinion on the risks associated with the programme. I can only encourage the Carbon Rating Agency to keep on with their analytical effort in this domain.” Dr. Klaus Oppermann, KfW Bankengruppe (at the time of writing, now at The World Bank)
- “I believe that ratings are important for the CDM market and that with credible, independent ratings and risk analysis, the CDM market will command greater institutional flows. I believe that project-specific ratings, such as those provided by the CRA, can constitute a useful risk management tool for carbon credit buyers.” Jonathon Young, Carbon Credit Underwriter, Munich Re
- “Quality and the risks associated with projects aimed at reducing CO2 emissions are of paramount importance to a lot of the players in the market, but these are also aspects that are still confusing. Independent assessment, applied across a broad range of projects could provide standardisation and transparency needed in this market. The Carbon Rating Agency is the first to introduce such a tool.” Dana Hanby, Senior Vice President, EUREX
- “We recognise the Carbon Rating Agency’s carbon ratings as an important instrument in enhancing the transparency and efficiency of the carbon markets. We believe that as an independent measure of performance and quality, carbon ratings provide a useful benchmark for determining the price of carbon assets. As a buyer of carbon credits, we support the Carbon Rating Agency’s efforts and would consider ratings assigned by them as an important input to our decision making process.” Ingo Ramming, Executive Director, Carbon Trade and Finance
- “IDEAcarbon has an excellent understanding of the carbon markets and have provided us with expert advice on the likely performance of carbon projects. Their understanding of the risks involved in this area was first-class and their independent analysis was an essential input to our decision making process.” Gavin Templeton, Senior Trader, Rabobank
- “CRA ratings should reduce the volatility and risk associated with investing in these projects. Getting a stable carbon value is important to ensure that we get a range of projects moving.” Robert Knowles, Omni Group
- “Ratings tools are definitely all welcome as they allow investors – such as hedge funds and other institutional investors who are less experienced in the carbon sector – to measure the risk of their investments. Edward Hanrahan, ICROA, Carbon offset trade association
- “The further development of risk tools is vital for maturing the carbon market. Ratings agencies, as the CRA, assist risk managers to look into important risk inherent to the CDM. We believe adoption of ratings would command credibility generally amongst buyers, potentially increasing institutional flows.” Patricia Rosenthal, Fortis Bank
ii. Programmatic Ratings
The Carbon Rating Agency (CRA) has refined its traditional rating methodology to take into account the additional complexities and risks associated with programmatic CDM (pCDM).
Highlights
- CRA has looked beyond the existing regulatory and design issues and explained the key implementation risks that will need to be properly understood in order for this promising mechanism to achieve its growth potential.
- Our pCDM Risk Assessment includes the technology being utilised, the market within which the scheme will operate and the implementation of the Programme of Activities.
- The CRA is set to promote best practice amongst pCDM’s investors and developers by providing an independent opinion on a PoA’s potential and of CPAs at the crucial design stages.
Typical customers
Programmatic CDM is in its early stages and risks are potentially high. Our Programmatic CDM Risk Assessment is particularly useful to:
- Regulators
- Sell side players
- Carbon credit originators
- Project developers
iii. Market initiated Ratings (MIRI)
The Market Initiated Rating Initiative (MIRI) aim is to use carbon project ratings as a core tool for providing both project and market insights on the delivery performance risks associated within the different project types.
Highlights
- Enables enhanced comprehension of regulatory framework risks associated with regards to specific projects and sectors
- Improves understanding of risk and performance associated with regards to specific projects and sectors
- Provides and accelerates due-diligence on deal flow
- Includes exclusive access to MIRI portfolio which covers a broad range of geographies and technologies, including CDM, JI, voluntary and gold standard projects
Typical customers
- Carbon investors
- Buyers
- Intermediaries
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