further announcement to come31 May 2015 13:29
Companies across California who emit more than 25,000 metric tons of CO2 equivalent per year must acquire allowances or offsets equal to their annual emissions.
Shares in Camco (LON:CCE) powered higher Thursday morning after the clean energy firm sold off a tranche of its Californian carbon credit portfolio.
Camco will receive US$1.74mln in cash up-front, with a potential further payment of US$0.5mln by the end of this year, after securing a deal with an unnamed major multinational company.
The deal involves Camco assigning to its new partner the rights to the future stream of carious California carbon offsets (CCOs) generated between 2015 and 2020; these CCOs will be derived from the majority of agricultural methane projects that Camco manages on behalf of its dairy partners.
The company added that after 2020, the rights revert to Camco.
House broker finnCap said the deal was excellent news.
“The sale price was US$1.74m, with the potential for a deferred payment of US$0.5m in December 2015, although the mechanism that triggers this has not been disclosed. We see this as excellent news – it helps to rationalise the Camco business portfolio, provides liquidity for the other businesses (especially REDT energy storage) and highlights some of the hidden value locked up within Camco,2 the broker said.
Camco has been developing offset projects in North America since 2007 and has issued two-thirds of all CCOs issued to agricultural methane projects registered under Californi’s cap-and-trade programme.
Camco said the transaction provides price security to its dairy partners for the credits generated by their projects. The deal significantly de-risks the future cash and returns generated for each dairy, including the Jerome and Twin Falls facilities owned by Camco.
Shares in Camco rose 11.9% to 5.875p on the news, and there may be similar deals coming down the turnpike, as the company said it expects to complete shortly a further structured transaction of its remaining projects that generate offsets between 2015 and 2020.
"This is a landmark transaction and we believe it to be the first of its type in the California Carbon Offset market underpinning our expertise in the area. The cash received from the sale will be used to support Camco operations, in particular the REDT Liquid Energy storage product which we are in the process of commercialising," said Scott McGregor, chief executive of Camco.
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