Carbon & Emissions Trading

As the world becomes increasingly aware of the dangers posed by climate change, emissions trading has emerged as a key instrument in the drive to reduce greenhouse gas emissions. Given that several applications of MicroPower’s technology will result in reduced emissions, most notably in industrial waste heat applications, the emerging ‘carbon market’ represents an interesting opportunity for the Company.

To explain the basic mechanics, participating companies are allocated allowances, each allowance representing a tonne of the relevant emission, in this case the carbon dioxide equivalent. The system allows companies to emit in excess of their allocation of allowances by purchasing allowances from the market. Similarly, a company that emits less than its allocation of allowances can sell its surplus allowances.

In practice, this often means that credits are generated in developing countries and purchased largely by companies in developed countries, via the Kyoto Protocol’s Clean Development Mechanism. According to the World Bank, this new market in ‘carbon credits’ has grown from $30 billion in 2006 to $67 billion in 2007 and $126 billion in 2008. The majority of this trading has taken place under the European Union’s emissions trading scheme, with London emerging as the trading centre. However, it is anticipated that the US market is expected to grow considerably in the coming years, hastened by the green focus of the Obama administration.

For MicroPower, this presents three interesting opportunities:

1. Projects making use of MicroPower’s technology will also be able to generate carbon credits.
2. Planned projects in developing countries may be able to generate a greater number of credits if MicroPower technology is used.
3. Qualifying companies, many of which are industrial operators with the types of installation that could benefit from MicroPower’s technology, may be able to use the Company’s products directly to reduce their own emissions.

Though the emissions market and its mechanics are constantly evolving, it is worth noting that carbon dioxide is by no means the only pollutant that the international community is looking to limit. The on-going process of phasing out harmful chlorofluorocarbon, hydrofluorocarbon and hydrochlorofluorocarbon gases used in refrigeration may provide another opportunity for MicroPower, as the ability to convert electricity directly into cooling without harmful refrigerants could provide a desirable alternative in certain applications.