CF Partners Starts Voluntary Carbon Unit, Competing on Price

CF Partners (U.K.) LLP, the London investment manager, is expanding beyond mandatory carbon trading to offer voluntary emission reduction products and services to boost sales.

The London-based group started Arctix Sustainable Solutions because companies including Microsoft Corp. and Marks & Spencer Group Plc are seeking to show their customers they are helping to protect the climate, said Tobias Troye, head of carbon solutions at the new unit.

“There will be an element of price competitiveness” because some buyers may be paying too much, Troye said yesterday by phone. “Buyers of voluntary offsets are not always interested in the lowest price, they are also interested in the marketing benefits the credits can bring their organization, or the project’s contribution to social development, for instance,” he said.

Gold Standard voluntary credits are at about 4.60 euros ($6) a metric ton, according to Tullet Prebon Group Ltd. data. That’s three times more than December Certified Emission Reduction credits under the United Nations-overseen Clean Development Mechanism, which fell today to a record 1.43 euros a ton on the ICE Futures Europe exchange in London.

There may be some consumption by voluntary offset buyers of CERs, Troye said.

“Demand from the voluntary market won’t be enough to boost prices in the CDM,” he said.

High Pressure

The low CER prices are a function of a lack of demand stemming from a failure of governments to set ambitious greenhouse-gas reduction targets, said John Davis, a trader at Arctix.

The voluntary offset market has encountered problems in the past. On Aug. 16, the U.K. Financial Services Authority said it was concerned that there was an increasing number of firms using “dubious, high-pressure sales tactics and targeting vulnerable consumers.”

“There are still unscrupulous sellers of voluntary emission credits, who damage the market’s reputation”, Davis said yesterday by phone. “We are confident this is a temporary problem, and are playing our part in flagging such firms to the relevant regulators.”

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net