Case Studies
J.S. Held Strengthens Forensic Accounting and Financial Investigations Expertise and Expands Suite of Services in Canada with Acquisition of ADS Forensics
Read MoreA large, integrated oil and gas company with global operations faced a complex challenge: to optimize their carbon market exposure and minimize the costs associated with complying with various carbon regulations. The company had a significant carbon footprint due to the nature of its operations. With the increasing prevalence and stringency of carbon pricing mechanisms worldwide, the client recognized the need for a comprehensive strategy to manage their carbon obligations effectively. The client faced several key issues:
J.S. Held, with its deep expertise in carbon markets and trading, was uniquely positioned to assist the client. The firm proposed the development of a comprehensive carbon optimization trading book tailored to the client's specific needs and objectives. The key components of the solution included:
Regulatory Analysis: J.S. Held's team of experts conducted a thorough analysis of the carbon pricing regulations applicable to the client's operations across various jurisdictions. This involved a detailed review of the carbon pricing system the Canadian province of Alberta, which allows for the use of performance credits, offset credits, and fund credits to meet compliance obligations. The team also assessed the implications for exposures in other Canadian carbon pricing systems, low-carbon fuel and blending requirements in the U.S., and global voluntary markets with pre-compliance potential. This analysis provided a clear understanding of the client's compliance obligations, credit utilization limits, and the available flexibility mechanisms.
Asset-Level Forecasting: The team collaborated closely with the client's asset teams to develop accurate forecasts of carbon emissions and credit generation potential for each facility. J.S. Held utilized advanced modeling techniques to forecast emissions and credit generation under various scenarios, considering factors such as production levels, fuel mix, and technology adoption.
Portfolio Optimization: J.S. Held developed a comprehensive carbon credit portfolio management strategy, leveraging their expertise in market analysis and optimization. The team identified opportunities to optimize the use of credits, such as:
Trading Strategy: The carbon optimization book included a detailed trading strategy, outlining the products, time periods, and volumes for trading activities. The trading strategy encompassed:
Risk Management: J.S. Held established a robust risk management framework to govern the carbon trading activities and protect the client's interests. This included defining trade volume limits based on the client's risk appetite and compliance needs—with separate limits for spot, forward, and swap transactions—and establishing pricing benchmarks and thresholds to ensure trades are executed at favorable terms and align with market conditions. J.S. Held developed a monitoring and reporting process, including regular monitoring of the carbon position, market developments, and regulatory changes to identify potential risks and opportunities, and providing timely reports to stakeholders on the performance of the carbon optimization book.
Continuous Monitoring and Adaptation: The carbon optimization book was designed to be flexible and adaptable, allowing for adjustments based on changing market conditions and the client's evolving needs. The team kept abreast of regulatory updates, such as changes to benchmark stringency, credit utilization limits, and the introduction of new compliance mechanisms, to ensure the client's strategy remained effective and compliant.
With expert guidance from J.S. Held and the implementation of the carbon optimization trading book, the client realized significant value including cost savings, revenue generation, risk mitigation, operational efficiencies, and regulatory compliance.
Andrea Korney
Vice President of Sustainability
ESG & EHS Digital Solutions
+1 725 567 0668
[email protected]
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We provide environmental, health, and safety (EHS); sustainability; and environmental, social, and governance (ESG) advisory and technology services globally. Our team draws on a vast array of experience in a diverse range of fields, including management consulting, regulatory compliance, information technology, and occupational health and safety.
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