Carbon Rating Agency - IDEAcarbon Group

Carbon Rating Agency - IDEAcarbon Group

Carbon Portfolio Assessment

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What differentiates the CRA's approach from other portfolio evaluation services is that the CRA's rating methodology is applied to individual project in the portfolio, or a representative sample of projects in a large portfolio, in order to evaluate its specific risk profile and the probable performance over the delivery period. The analysis will refine the parameters used in CARBONrisk, an emission reduction delivery estimation platform based on Monte Carlo simulation to estimate the most likely performance of the portfolio aggregated from the likely delivery of the underlying projects.

CARBONrisk applies project risk exposure windows to determine how subcomponent discount factors cumulative to the project offtake composite level. These discount factors scale against the applicable secondary curve prices for delivery periods of concern to determine the CARBONrisk risk adjusted price. CARBONrisk risk-adjusted prices are multiplied by nominal delivery volumes to arrive at offtake financial value across the delivery period. These values are combined across project to arrive at portfolio-wide valuations.

The Carbon Portfolio Evaluation offered by the CRA is a transparent and interactive process. The inputs to the portfolio simulation can be provided to the Client if requested and their origin will be explained. These inputs will be discussed with the Client and the CRA team can test different variations for sensitivity analysis.

The outputs of Carbon Portfolio Evaluation include:

  • Risk adjusted CER delivery schedule for the overall portfolio
  • Analysis of the contribution to the portfolio from individual projects
  • Probability estimations of achieving defined volumes of CERs in the pre-defined timeframe (e.g. pre-2013)
  • Overview of portfolio performance, highlighting the key risks
  • Individual project risk analysis report for the selected sample of projects.

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