EDF Buys China's Energy Systems to Tap Low-Cost Supply of Carbon Credits
Electricite de France SA, the world’s largest utility, bought China’s Energy Systems International Ltd. in a deal that provides access to a low-cost source of emission-reduction credits.
The trading unit of Paris-based EDF, which didn’t disclose the purchase price, is buying a developer of offset credits that can be used for compliance in the European Union’s cap-and-trade program, the world’s biggest. Utilities are seeking to produce credits from Asia before a forecast surge in prices later this decade, according to analysts including Trevor Sikorski at the investment bank of Barclays Plc.
“This is a significant transaction for EDF Trading, as it will enable us to expand our presence in the carbon market as well as provide a strong platform for further development in China”, John Rittenhouse, chief executive officer of EDF Trading Ltd., said today in an e-mailed statement.
Energy Systems, with offices in Beijing, Shanghai and Amsterdam, had 56 emission-reduction projects approved by China as of May 20, with 30 registered by the United Nations-overseen Clean Development Mechanism Executive Board, according to a statement on its website.
The company’s projects have 1.4 million metric tons of credits issued, with 37.5 million tons expected through 2012, according to the Bloomberg CDM database, which lists 51 projects for Energy Systems.
“EDF Trading is very knowledgeable in the carbon market and it has its own portfolio so it surely knows what it is doing,” Laurent Segalen, managing director, commodities trading, at Nomura International Plc, said today by e-mail. Energy Systems will be a lot more valuable for EDF should countries introduce climate-protection laws that create demand around the world for credits beyond 2012, Segalen said.
CER Prices
UN Certified Emission Reduction credits for December fell 1.5 percent to 11.40 euros ($14.82) a ton as of 11 a.m. in London on the European Climate Exchange. They have risen 3.8 percent this year. Sikorski of Barclays Capital forecast last month they will rise to 20 euros a ton as early as 2013.
London-based Barclays agreed in June to buy Tricorona, another carbon developer, in a takeover valued at about 1.1 billion kronor ($150 million). JPMorgan Chase & Co. last year bought carbon business EcoSecurities for about $200 million.
To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net
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