Carbon Dioxide Trading Breathes Life Into Futures Markets

ENERGY TECH

The European carbon market, to begin trading officially in January, is one of three incentives under the UN pact aimed at easing companies' costs of reducing CO2 pollution, the main culprit for global warming.

London (AFP) Nov 14, 2004
Trading in quotas of carbon dioxide (CO2) emissions, to officially begin on the world's first carbon market in the new year, promises to be lucrative for a number of financial institutions, experts say.

Some 2.3 million tonnes of the gas exchanged hands in October on the informal CO2 futures market, as much as the first nine months of the year, according to Point Carbon, a provider of independent analysis on the trading of greenhouse gases.

"The market has been growing very quickly since the summer," said Atle Christiansen, a director of Point Carbon.

The Kyoto Protocol requires three dozen industrialized countries to reduce or stabilise their emissions of CO2 and five other greenhouse gases between 2008 and 2012 relative to their 1990 levels.

EU nations agreed overall to an eight-percent cut in emissions while the bloc's governments have set individual emissions targets for 12,000 installations.

A company that works hard to keep emissions low can sell their unused quotas on the carbon market to a firm requiring additional limits to avoid financial penalties for overshooting set targets.

Currently on the unofficial carbon market, one tonne of CO2 trades for an average price of 8.5 euros (11 dollars), according to James Emanuel, a director for brokerage firm Evolution Markets.

"But the price is fluctuating quite widely," he said. "The lowest is 5.0 euros and it's been as high as 13.4" since informal trading began in February

The European Commission has said it has no view on what the price of allowances should be. "The price will be a function of supply and demand as in any other free market," it says on its website.

Analysts forecast a market worth 50 billion euros during the 2005-07 contract period, with 5.0 billion tonnes of CO2 being traded at an average price of 10 euros a tonne.

It could even go higher, according to experts.

"The allowances are going to be traded probably on multiple occasions, so the market will probably be a multiple" of 50 billion euros, Emanuel said.

Christiansen meanwhile said the market could quote a value of "about 80 billion euros by 2007".

Such figures have caught the eye of financial institutions, keen to capitalise on hefty commissions earned by playing the role of broker.

Banking giants Barclays, Fortis and Dresdner Kleinwort Wasserstein have so far played key roles in acting as go-betweens, according to Evolution Markets.

Around a dozen brokerage firms have also got in on the act, while other financial heavyweights including Morgan Stanley, Goldman Sachs, Deutsche Bank and Societe Generale are expected to come on board.

"We know that many other banks are definitely looking at this," Christiansen said.

The carbon market has also caught the attention of energy giants.

Shell last month became the first company to strike a deal regarding trading of the 2008-2012 futures contract. The Anglo-Dutch group has agreed to buy or sell CO2 futures at the fixed price of 8.75 euros to an unnamed company, allowing Shell to hedge against any price fluctuations.

All rights reserved. � 2004 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

EARTH OBSERVATION

Climate: Earth Losing Ice In Every Form

Boulder CO (UPI) Nov 07, 2004
Earth appears to be losing its ice in virtually every form, from glacial peaks to the permafrost frozen deep below ground. Suspicion naturally falls on greenhouse gases and global warming as the cause, but there are a few other candidates for the honor.

Thanks for being here; We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain. With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords. Our news coverage takes time and effort to publish 365 days a year. If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor $5 Billed Once credit card or paypal		SpaceDaily Monthly Supporter $5 Billed Monthly paypal only

The content herein, unless otherwise known to be public domain, are Copyright 1995-2016 - Space Media Network. All websites are published in Australia and are solely subject to Australian law and governed by Fair Use principals for news reporting and research purposes. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA news reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement All images and articles appearing on Space Media Network have been edited or digitally altered in some way. Any requests to remove copyright material will be acted upon in a timely and appropriate manner. Any attempt to extort money from Space Media Network will be ignored and reported to Australian Law Enforcement Agencies as a potential case of financial fraud involving the use of a telephonic carriage device or postal service.