November 12, 2010
A while ago, I was approached by a specialized social network to help them assessing how their platform could be used for building up smarter cities and monitor investments from a sovereign investor.
Here are some hints about how this might work:
The idea is to check the potential contribution of said social network platform to four building blocks supporting the implementation of the sovereign investor’s urban strategy:
– Knowledge programs, product development and dissemination
– Financing strategies
– Partnerships platforms and cities alliances
– Results management , f.i. based on the Global City Indicators Program (www.cityindicators.org)
Investments in non-Annex I countries are mainly done through Kyoto’s flexible Clean Development Mechanism (CDM), where a valid project is granted carbon credits under the form of Certified Emission Reduction units (CER’s). Those CER’s being thereafter tradable on specialized exchanges: Bluenext or ICE ECX.
Hereafter are some issues that might potentially be addressed by a social network platform, with regard to both external stakeholders and cities’ inhabitants:
1. Tools for external stakeholders
a. The baseline is to organize CDM projects successful application, financing, follow-up and redistribution of carbon credits. To a certain extent, a network of investors should get access to a pool of generated carbon credits in order to manage their carbon neutrality.
1. Funding/collection: obviously the idea being here to structure the CDM application process, one could easily build up teams and schedules/milestones in order to improve success rate; a typical sequence being:
Feasibility assessment / Carbon assessment / Construction / Validation & registration / project implementation / Carbon transaction (primary) / Verification & certification / Issue of CER’s
2. Organize/rationalize an exchange around candidate CDM projects (investors meet projects initiators)
3. An exchange platform where initiators of smaller projects might group their efforts or meet investors demands
4. Projects financial performance/benchmarking: once a CDM projects has been approved and started, access to ad-hoc KPI’s for interested parties should be made available. Aside from the project contribution to the 22 themes of the Global City Indicators program, the actual additionality of the project and the carbon credit potential to investment should be tracked as well, that ideally related to the footprint evolution of the entity (see below).
5. Risk management, related to point 1, f.i.: Credit risk / certification risk / counterparty risk/ business interruption / political risk / CER price-volatility risk / natural disaster / technology risk / CER quantity risk.
6. Securitization of CDM projects: as several funds already exist that are focusing on climate change and energy matters, it is plausible that such a fund could be dedicated in the future to urban development CDM projects. Some portfolio management investment network sites being already present on the web, a social network platform might consider going in a similar direction, although dedicated to ‘carbon’ related projects. This would greatly help leverage said dedicated funds by getting additional participation from the network.
1. Footprint evolution: a link with a repository in the like of the Carbon Disclosure Project (www.cdproject.net) might prove useful in order to track cities initiatives and results.
2. Empowering charity fund collection in emergency cases related to natural disasters.
2. Tools for inhabitants
a. Resources management/benchmarking
b. ‘In house’ trading of carbon credits
d. Profit sharing and redistribution
This part will be further developed in a future post.Author : Bruno Simon