THE INVESTMENT of the world’s largest bank in a developer of greenhouse gas abatement projects is one example of the way carbon emissions reduction is now becoming a mainstream industry, according to a law firm that worked on the deal.
Baker & McKenzie partner Andrew Beatty was the Australian lead partner for an international deal involving Citigroup Venture Capital International (CVCI) and Black River Asset Management, which took an equity placement in Sindicatum Carbon Capital Limited (SCC).
“This was interesting because it is an example of the mainstreaming of climate change because our client was the world’s biggest bank, and we are currently acting for other major financial institutions who are not just lending to these projects, but taking equity positions in them,” he said.
SCC will use its pool of new capital to accelerate the development of its greenhouse gas reduction projects, invest in new and emerging technologies, and acquire more infrastructure assets.
Bakers’ corporate partner Clive Cook in London led the work on the transaction itself, with the firm’s Sydney office conducting due diligence on the projects that Sindicatum plans to develop with the funds invested.
“We also advised on the international rules under the Kyoto Protocol, with particular emphasis on new methodologies Sindicatum was wanting to use to generate carbon credits, particularly from nitric acid plants,” Beatty said.
Beatty was supported by associates Paul Curnow and Ashley Stafford. Most of the projects being developed with this investment are in China, so Bakers’ Beijing office was also involved.
Bakers work for their clients included conducting country risk analysis for each of the jurisdictions in which the projects were located.
“Apart from the international law, there’s also domestic laws which needed to be considered,” Beatty said.
“Because of our experience in advising on carbon projects around the world, [we] gave advice on the risks associated with individual projects, and whether or not they are going to generate carbon emission reduction certificates, which is the currency of the global carbon market.”
“SCC’s commitment to our planet is total and unequivocal,” said Lord Stone of Blackheath, SCC’s deputy chairman in a statement. “The introduction of Citigroup and Black River into our shareholding will significantly strengthen our operational capabilities to deliver solutions to businesses worldwide that aim to enhance our collective quality of life while striving to deliver zero-emission industrial processes.”
Andrew de Pass, managing director of CVCI, said its investment in SSC underscores Citigroup’s commitment to reducing greenhouse gas emissions and SCC brought a “new discipline and focus to GHG emissions reduction projects around the world”.