Carbon Credit Watch

Carbon Credit Watch: Carbon trading resumes, trading volumes dismal

(February 7, 2011) Carbon trading has resumed in five EU Countries, though volumes have remained dismal due to concerns over the integrity of carbon markets.

Wall Street Journal, February 3, 2011, “Carbon trading to resume in Five EU Countries”

The European Commission on Thursday cleared five of the larger national European emissions registries to reopen, but traders and other market participants expect a tepid return to spot trading due to residual unease after recent thefts.

The commission, which oversees the troubled Emissions Trading System, or ETS, said exchanges from France, Germany, the Netherlands, Slovakia and the U.K. could reopen Friday after a security review. Spot trading on the ETS has been suspended since Jan. 19 following thefts of about €30 million (about $40 million) of allowances from three national registries.

But leading exchange platforms—the venue for most ETS spot trading—in these five countries gave no additional details on reopening. Furthermore, market participants said they are skittish about executing trades out of concern they might end up purchasing stolen credits.

“I would imagine there will hardly be any volume tomorrow,” said Alessandro Vitelli, director of strategy and intelligence at IDEAcarbon, a carbon strategy and research consultancy in London.

Read the full story here.

Reuters, February 4, 2011, “EU spot carbon market re-opens, buyers shun it”

The European Union’s spot carbon market re-opened on Friday after a three week closure, but no exchange trades were completed in the early morning as traders feared new revelations of stolen emissions permits.

The theft of permits worth at least 45 million euros had forced the EU executive Commission to close last month the electronic warehouses where permits are kept, called national registries.

An EU official confirmed on Friday that five registries had re-opened, in France, Germany, the Netherlands, Slovakia and the Britain, while a spokesman for the Paris-based BlueNext spot exchange confirmed that it had also opened.

However there were no trades by 0930 GMT on the exchange, underlining trader fears that unidentified stolen permits may still be in circulation. No clear rules on liability meant that buying these risked a loss of full face value.

Read the full story here. [PDFver here]

Business Green, February 4, 2011, “Carbon spot trading resumes, but volumes remain in dolldrums”

Spot trading in the carbon market resumed today as five national carbon registries re-opened following last month’s cyber attacks. But trading volumes remained low as traders expressed fears that they could inadvertently purchase stolen credits.

As of 1pm, only 25,000 EU allowances (EUAs) and 10,000 certified emission reduction (CERs) credits had been traded on the BlueNext carbon exchange. On a typical day hundreds of thousands of credits are traded on the spot market and volumes of EUAs traded on the BlueNext can top one million units.

Read the full story here. [PDFver here]

The Economist, February 3rd, 2011, “Green fleeces, red faces”

IT IS, according to enthusiasts for carbon markets, a sort of backhanded compliment. Scoffers may think the trading of carbon emissions cannot be taken seriously as a proper commodity market. But hard-nosed criminals have seen that it involves enough real money to be worth casing.

Unfortunately, the criminals also spotted that the people who were not taking the market seriously enough included the European Commission and the EU’s member states, which oversee the Emissions Trading Scheme (ETS), the world’s biggest market in carbon emissions. In early January thieves took advantage of lax security to steal over 3m carbon credits (about 2 billion are issued each year). They managed to take 1m from Holcim, a cement maker, half a million from the Austrian government, a bunch more from various accounts held in the Czech Republic and some from the Greek registry. The market value of the haul is about €45m ($62m).

Within the ETS the carbon credits which large emitters need to surrender to governments in order to keep emitting are held in electronic form in national registries. The thieves managed to break into the accounts in which companies keep their credits on some of these registries and transfer the credits to other accounts, from which they could quickly be sold on. Europe’s registries were closed down on January 19th, to reopen only when better security standards are in place. Some registries were expected to reopen by February 4th but as long as they remain closed spot-market trading is impossible, since no one can get at their credits.

Read the full story here. [PDFver here]

1 reply »

  1. This is important: when you’re setting up a ‘cap and trade’ the ‘cap’ is just as important as the trading.
    Carbon offsets and CDM projects are not subject to a cap on emissions, so there is really no way to tell if a project is actually reducing emissions, or just sqeezing the balloon, and moving the emissions to somewhere else in the economy.

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