Some HFC Offsets Won’t Reach European Market, Trading Emissions Plc Says
Trading Emissions Plc said about 18 percent of the emission credits it expects from cutting hydrofluorocarbon-23 won’t be ready to meet an April 30, 2013, deadline to be imposed by the European Union carbon program.
About 2 million tons of the 11.4 million tons of United Nations credits anticipated probably won’t be ready for sale before that deadline, Simon Shaw, the company’s investment adviser and founder of EEA Fund Management Ltd., said today by phone. The reductions need to be verified by audit firms and pass through the World Bank Umbrella Carbon Facility, a process that probably takes more than three months, he said.
“We don’t believe there is a way of accelerating” that process, Shaw said. The 2 million spares probably will instead be sold in China, Japan and New Zealand for more than their 6 euro ($8.50) a ton cost, he said. Certified Emission Reduction credits for December fell as much as 3.1 percent today to 12.55 euros a ton on the ICE Futures Europe exchange in London and were at 12.67 euros as of 4:15 p.m.
Some UN credits can be used by emitters in the EU, which runs the world’s biggest cap-and-trade program. The bloc proposed banning credits tied to HFCs and some nitrous oxide projects, saying they have generated “exorbitant” returns and created a “perverse incentive” for investors, undermining the market’s integrity.
‘Snail’s Pace’
More than 11,000 power plants and factories in the EU system may use UN credits as a cheaper way to comply. Regulators around the world are clamping down on credits tied to HFC-23, whose warming potential per molecule is 11,700 times more powerful than carbon dioxide. Officials at the UN carbon market in November called for a revision of its HFC-23-project-approval procedures.
The Clean Development Mechanism, the world’s biggest greenhouse-gas offset market, has improved the pace of new supply in the past six months, Shaw said. “I would describe this as moving from a glacial pace to a snail’s pace.”
Trading Emissions narrowed its net loss to 1.4 million pounds ($2.3 million) in the six months through Dec. 31, compared with 18.3 million pounds in the same period in 2009, as EEA returned performance fees to the company, according to a statement distributed by the Regulatory News Service. EEA and Trading Emissions in August amended their investment advisory agreement, prompting the return, the company said.
Trading Emissions shares rose as much as 3.9 percent today to 112 pence in London, the highest since Oct. 26, 2009. They were at 108 pence as of 4:15 p.m. A process to sell the company’s renewable energy and carbon portfolios was making progress, Shaw said.
An increase in the carbon price this year has boosted the net asset value of the company by 9.6 percent to 148.94 pence a share, “which gives us a good degree of confidence in our 137- pence valuation,” Adam Forsyth, an analyst for London-based Matrix Group Ltd., said today in a research note. Matrix, the investment manager, has a “buy” rating on the company.
To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net; Catherine Airlie in London at cairlie@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
Rate this Page