“From the word ‘go’ we were sort of international” says Pedro Moura Costa, musing over his company’s humble beginnings. “We’ve grown organically during the years.”
In just over 10 years, EcoSecurities has gone from the idea of two men, to a heavyweight, global player in the carbon credits trading market; specialising in the sourcing, creating and trading of carbon credits from greenhouse gas emission reduction projects.
“We’re pretty much a one-stop-shop in terms of creation and delivery of carbon credits in this sector,” says Pedro Moura Costa. “Half of the company works in developing countries, helping project developers access finance for projects that reduce emissions. The other half of EcoSecurities deals with developed countries, or corporations in developed countries, that need to reduce their emissions.
“We run a diversified portfolio of carbon credits with credit sources from around 400 projects in close to 40 countries around the world. We are one of the, if not the main, supplier of carbon credits to the international carbon market.”
Win, win, win
The idea for EcoSecurities began simply enough. “I ran one of the first projects funded by carbon credits in Southeast Asia,” says Pedro Moura Costa. “We had the chance to finance a large reforestation project with funds from a power plant in Europe that wanted to be carbon neutral. It was cheaper for this plant to do so through the planting of trees in Asia. It was a phenomenal concept: win, win, win: A win for us in Malaysia because it was a cheap source of capital; for the European power plant because it was the cheapest way for them to reduce emissions; and a win for the environment.
“My partner, Marc Stuart, was involved in a similar project. It fascinated me that this had the potential to catalyse change in the engagement of environmental activities in a much larger scale than through voluntary donations to NGOs. After running the project, I wanted to replicate and multiply what I had experienced in Malaysia. Marc and I realised the carbon credit market was a lucrative industry, both in terms of business and helping the environment, so we spent a lot of time in the early days conceptualising where we would take it.”
“We created EcoSecurities in early 1997, working with one of the first national level greenhouse gas projects in the world, the Costa Rican greenhouse gas mitigation programme. When the Kyoto Protocol came into force later that year, it vindicated our view that carbon trading was here to stay.”
Clean Development Mechanism
EcoSecurities deals with carbon trading under the Clean Development Mechanism (CDM). The CDM is an arrangement under the Kyoto Protocol allowing industrialised countries wishing to reduce their greenhouse gas emissions to invest in emissions reduction projects in developing countries. Under the Kyoto Protocol, all large scale CDM projects must be both verified and validated but by two separate, independent third parties.
This is where DNV comes in. DNV is accredited by the UNFCCC (United Nations Framework Convention for Climate Change) as a Designated Operating Entity (DOE) and was one of the first DOEs to be accredited for the verification of all major CDM scopes. For most of EcoSecurities’ projects, DNV provides validation services of the project design and determines whether or not a project is eligible for participation in the CDM. This includes validating the “additionality” of projects, confirming they wouldn’t occur without the additional incentive provided by emission reductions credits. In some cases, DNV may provide verification services instead however, with EcoSecurities, DNV generally validates projects.
Essential third party validation
“DNV’s role is essential for carbon trading,” says Pedro Moura Costa. “For example: a ton of greenhouse gas emission reductions is not something you can see, smell, or hold and put in a container. It’s only as credible as the documentation behind it. So it’s important that all the processes utilised to reduce emissions are well documented and validated by an independent body.
“We chose DNV for the validation process as it’s a leader in this area,” he continues. “DNV probably has the largest presence internationally, is knowledgeable and is accredited to provide these services for a wide range of CDM projects. CDM is a complex process and it’s important that the validater understands it for validation to be smooth. The technical capacity of DNV is very strong and we don’t need to educate the company as we might others. DNV’s job in this process is essential in maintaining credibility in this somewhat ‘virtual’ market.”
Date: 13 June 2008