EcoloCap Solutions (OTCBB: ECOS) is focused on delivering shareholder value through a green business model that includes creating renewable energy sources and projects that offer high concentrations of CO2 and methane (CH4) gas (i.e. hydro-power, biomass alternative fuels, and methane gas capture from landfills) to reduce carbon emissions by replacing fossil fuels such as coal and natural gas in the production of electricity. The primary focus of this business model is the creation of tradable carbon credits, which are termed Certified Emission Reductions (CERs), at low prices in emerging markets and selling these credits for much higher prices in established markets. Over a decade ago, the Kyoto Protocol created free market incentives called carbon credits to reduce the worldwide emission of greenhouse gases. The CERs are issued from Kyoto’s Clean Development Mechanisms (CDM) projects which result in the reduction of harmful carbon emissions to reduce air pollution – in addition to economic benefits such as creating jobs and shareholder value. EcoloCap is initially focusing its efforts in Vietnam and China with plans to follow-up in the markets of Latin America and Africa, leveraging upon its technical expertise in clean energy projects and its extensive network of contacts in Eastern Asia which enjoys a very active CDM market.

In December 1997, the Kyoto Protocol was enacted to reduce the emission of greenhouse gases by 5.2% from 1990 levels during the period of 2008 – 2012, resulting in quotas that are imposed on the industrial carbon emissions of participating nations Greenhouse gas emissions are quantified as an equivalent of tons of carbon dioxide (CO2) released into the atmosphere. The CDM provides the opportunity for developed nations such as the United States (US) to purchase carbon credits or CERs (certified by the United Nations and equivalent to the reduction of one ton of CO2 emissions) which are generated from renewable energy projects in participating countries such as Vietnam and China. The tremendous financial opportunity for companies such as EcoloCap lies in their ability to generate CERs in emerging and frontier markets at a below-market cost and then sell the carbon credits at current market prices in developed countries such as the US.

The head of environmental markets at Barclays Capital has predicted that carbon credits could become not just the world’s biggest commodity market; but the biggest market overall, with market experts predicting a staggering total of $1 trillion possible within a decade. The European Union Emission Trading Scheme (EU ETS) is the largest market for the trading of emission allowances, spanning 28 countries throughout Europe; and other developed countries such as the US, Japan, and Australia are developing similar ETS markets. Carbon commodity trading is dominated by EU Allowances (EUAs) with a 78% share, followed by CERs which are created through CDM projects such as those described earlier.

As part of this bullish view on the future of carbon credit trading as a new commodity class, Barclays has recently launched an exchange-traded note (ETN) to track the global price of carbon. The iPath Global Carbon ETN (NYSE: GRN) trades throughout the day just like stock and is structured to track Barclay’s Global Carbon Index Total Return, with several similar products in registration for potential market launches to provide investors with simple, low-cost access to the market for carbon credits. These carbon credits are traded by companies who get tax breaks and other incentives for lowering pollutants into the air, as well as investors and speculators who want to participate in the global reduction of greenhouse gases.

EcoloCap Solutions (OTCBB: ECOS) currently has a total of seven signed renewable energy projects which will generate an estimated $39 million in revenues (versus a market cap of just $26 million) and $15 million in cumulative cash flow through 2012, in addition to tradable carbon credits. In addition, the Company has an equal number of pending projects in its pipeline which are expected to close before year-end, resulting in $80 million of potential revenues and $30 million in cumulative cash flow through the end of 2012. The seven signed projects are outlined in my previous post, detailing each of the clean energy initiatives along with their financial and carbon credit implications.

Last 5 posts by Mike Havrilla

• Albertis $12.8B Bid to Lease PA Turnpike Expires with No Deal - October 1st, 2008
• Congress Working Overtime: $634B Spending Bill and Bailout Plan - September 27th, 2008
• Pfizer is a Big Pharma Buy - September 24th, 2008
• Bristol-Myers Ups Bid to $62 for ImClone - September 23rd, 2008
• Climate Exchange Rebounds on Robust Results - September 20th, 2008