Public Commentary: The information below outlines FG Capital’s approach to Certified Emission Reduction (CER) project structuring. It is provided for informational purposes only and does not constitute investment advice or a solicitation.
CER Projects – Certified Emission Reduction Structuring (CDM-Linked)
The Clean Development Mechanism (CDM) contains a portfolio of proven methodologies, established baselines, and thousands of registered projects. Although primary demand for CERs declined after 2012, Article 6 of the Paris Agreement and voluntary-market reforms have renewed interest in upgrading—or “transitioning”—CDM assets. FG Capital provides comprehensive advisory, capital structuring, and market-access services to convert legacy or new CDM-linked projects into bankable CER streams that satisfy today’s environmental-integrity criteria and buyer preferences.
CDM Transition Pathways
• Article 6 Authorisation:
Securing host-country letters of authorisation for corresponding adjustments and ITMO issuance.
• Voluntary-Market Conversion:
Cancelling CERs on the UNFCCC registry and re-issuing as VCUs under Verra’s “CDM Transition” pathway.
• Methodology Upgrade:
Aligning legacy monitoring plans with latest IPCC guidelines, leakage factors, and conservative baselines.
• Permanence & Buffer Pool:
For land-use projects, adopting VER-style risk-sharing arrangements absent in the original CDM framework.
High-Demand CER Project Types
• Methane Abatement:
Landfill gas, livestock digesters, coal-mine methane—high additionality and measurable impact.
• Renewable Energy (pre-2013 start date):
Wind, solar, hydro, and biomass projects in low-income countries.
• Industrial-Gas Destruction:
N 2
O abatement in nitric-acid plants and residual HFC-23 destruction.
• Energy-Efficiency Programmes:
Compact-fluorescent lamp (CFL) distribution, efficient cookstoves, and building retrofits aggregated under PoAs.
• Afforestation/Reforestation (A/R):
Long-rotation forestry with robust leakage and permanence safeguards.
Our Structuring Framework
1 | Eligibility & Additionality Review
• Assess methodology validity, baseline conservativeness, and host-country Article 6 policy.
2 | Capital Structuring
• Senior green loans, subordinated facilities, or advance CER-purchase agreements matched to issuance timelines.
3 | MRV Modernisation
• Digital-data systems, QA/QC upgrades, and auditor-ready documentation.
4 | Registry & Authorisation
• UNFCCC registry management, cancellation requests, and host-country corresponding-adjustment procedures.
5 | Credit Monetisation
• Structured offtake agreements with compliance entities (EU, UK, CORSIA) and voluntary buyers; spot-market execution following issuance.
Indicative Financial Benchmarks
| Project Category | Forward CER Price (USD / t) | Senior Debt Margin* | Target Equity IRR |
|---|---|---|---|
| Methane Abatement | 7 – 10 | SOFR + 250 – 325 bps | 12 % – 16 % |
| Renewable Energy (LDCs) | 8 – 12 | SOFR + 250 – 325 bps | 11 % – 15 % |
| Industrial-Gas Destruction | 9 – 13 | SOFR + 275 – 350 bps | 13 % – 17 % |
| A/R Forestry | 14 – 18 | SOFR + 275 – 350 bps | 14 % – 18 % |
*Indicative spread for limited-recourse senior debt with 8- to 12-year tenor.
Stakeholder Benefits
- Project Sponsors: Monetisation of legacy CER stockpiles and renewed revenue from post-2020 issuances.
- Credit Purchasers: Access to UN-registered units with transparent provenance and potential Article 6 adjustments.
- Investors: Predictable cash flows underpinned by compliance-market demand and robust MRV.
- Host Nations: Contribution to NDC targets and sustainable-development co-benefits.
Engagement
Owners of registered CDM projects or developers considering new CER-generating initiatives are invited to consult our advisory team. We would be pleased to discuss eligibility, financing pathways, and strategic credit-placement options under evolving Article 6 and voluntary-market frameworks.
This document serves informational purposes only. It does not constitute investment advice and should not be interpreted as an offer to buy or sell any security, financial instrument, or service. Independent professional guidance is advised before acting on any information contained herein.
