Wednesday, 25 November 2009

Ex-AGL chief moves to green air fund

Monday 23/11/2009 Page: 2

FORMER AGL chief Paul Anthony will head up a fund seeking to develop emissions reduction projects in developing countries while promising to triple investment over the 10-year life of the fund. The Matrix Green Air Fund plans to use the Clean Development Mechanism (CDM), an instrument established under the Kyoto Protocol, to provide Australians with exposure to the growing demand for carbon credits in tandem with other revenue streams. The CDM allows industrialised countries that are signatories to Kyoto to meet emissions targets by investing in projects in developing countries, usually less expensive then emission reduction projects in their own country.

Green Air aims to raise $100 million through its feeder fund, while the underlying private equity fund is targeting $US250 million ($A272 million). Green Air has six investments in the Asia Pacific, which aim to deliver a return of 4.4 tunes within three years. Mr Anthony said Green Air focused on projects with two sources of revenue, such as renewable energy plants that generate carbon credits as well funds through power generation.

"The Matrix Green Air fund.., is not a clean-tech fund, carbon specific fund, infrastructure fund or traditional highly leveraged private equity fund focused on buy-outs," he said. "By investing directly in projects which generate carbon credits and other annuity revenues, investors gain exposure to the carbon economy value chain while also mitigating any risks associated with regulatory and commercial charges in the carbon market."

Mr Anthony said the fund was not exposed to the outcome of climate change talks in Copenhagen because the carbon credit agreements were structured through the European Union carbon market, which has already committed to targets out to 2020. Nic Frances, executive chairman of Cool nrg, which has launched the first household energy efficiency project in Mexico under the CDM, said investors needed to establish a close relationship with communities in developing countries to ensure the success of projects.

"Most people aren't taking majority positions because they realise they need to involve the people who know the project," he said. "We encountered a lack of Australian funding that understood the CDM so if that is advancing that is a good thing. But if you are going to get into this space you need to know the community and bring them with you or the thing is going to fail."