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Camco expects new Malaysia revenues in 2011

LONDON (Reuters) - UK-based carbon investor Camco CAMIN.L expects its new Malaysian joint venture to complete five to 10 projects in 2011, the company's Chief Executive Scott McGregor told Reuters on Monday.

Camco announced the venture with the Malaysian government’s investment arm last month, in a move building on the company’s strategy to ramp up a new energy generation business in addition to producing carbon offsets.

Carbon offset projects largely depend on the Kyoto Protocol, which has an uncertain outlook after 2012 given the slow pace of U.N. climate talks.

“I think we’ll probably put away five, 10 projects (next year in Malaysia),” said McGregor. The company’s focus included biogas plants generating energy from farm waste, and projects to trap industrial waste heat.

“The assets we invest in typically take six to nine months, so next year we’ll start see cash come off the assets,” he told the Reuters Global Climate and Alternative Summit in London, adding the unit had about $120 million in capital including debt.

“The clean energy business is our long-term equity proposition,” added McGregor, focusing on China, the United States and southeast Asia.

“That’s where the most emissions are. Our premise is to reduce emissions, whether that’s generating energy, producing carbon credits or getting environmental RECs (renewable energy certificates).”

The company is also expanding its U.S. business and expected to start building two to three biogas projects there this year.

Camco projects its energy generation arm to grow to 40 percent of its total business by 2012 from zero and its carbon offset business to fall to about 40 percent from 80 percent.

The Kyoto Protocol allows rich countries to meet carbon emissions limits by investing in emissions cuts in developing countries, earning carbon offsets in return.

But the present round of the protocol expires in 2012 and there is little certainty of a subsequent deal after little headway in U.N.-led talks last week in China.

Camco had factored in the possible failure in the negotiations by only pursuing offset projects which would break even without a post-2012 climate deal, said McGregor, who added that a comprehensive deal would also be positive.

“We’re fairly high NPV (net present value) positive for a significant number of projects post-2012.”

In the meantime, a speeding up of U.N. processing of carbon offset projects in the past few weeks had been “very positive for our business,” he said, referring to a seven-fold increase in approvals called “issuances,” in U.N. Kyoto jargon.

“We were confident the new procedures would help but we didn’t realize they would help that much.”

Reporting by Gerard Wynn and Nina Chestney; Editing by David Holmes

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