Clifford Chance has advised longstanding client Morgan Stanley on the syndication of a deal to buy 29.5m tonnes of carbon emission credits from a Chinese chemical plant, the largest private syndication of carbon.
Under the Kyoto Protocol’s Clean Development Mechanism, carbon credits can be bought from China and then sold to companies within the EU Emissions Trading Scheme, to help the companies meet their emission reduction obligations under the scheme.
In this instance, the credits result from a project designed to reduce emissions of the potent greenhouse gas HFC-23 at the Zhejiang Juhua plant in China.
The fund was established by Climate Change Capital, which was advised by Baker & McKenzie and who will buy the carbon credits on behalf of the syndicate.
The syndicate members will then invest in these credits through the fund. Along with Morgan Stanley, other syndicate members include Centrica, Deutsche Bank and Dutch Pension fund, PGGM.
The magic circle firm’s team was led by London partners Bleddyn Phillips, Nigel Howorth and Claude Brown who worked closely with the firm’s Beijing and Shanghai offices on syndication and trust deed documents, as well as on the Emissions Reduction Purchase Agreement.
Energy partner Bleddyn Phillips said: “This deal has built on our knowledge and expertise in our renewables sector. We anticipate seeing more activity in this area in the next few months, certainly in China and possibly other developing jurisdictions where there is more scope for passing on the benefits of the scheme.”