Morgan Stanley Sells Carbon Developer Stake to Mercuria Energy

Morgan Stanley, which said in 2006 it would spend about $3 billion on emission credits and greenhouse gas-reduction projects in five years, sold its stake in a carbon developer to Mercuria Energy Group Ltd. for an undisclosed sum.

Geneva-based Mercuria bought the stake in MGM International Group LLC, a Miami, Florida-based developer of carbon credits, from shareholders including a unit of Morgan Stanley and MGM’s founders, it said today in an e-mailed statement. Morgan Stanley said in 2007 that it had bought 38 percent of MGM in the previous year. Hugh Fraser, a Morgan Stanley spokesman in London, declined to comment when contacted by e-mail and phone.

“MGM represents a strategic move for Mercuria and signals our belief in the long-term opportunities in this market, including post 2012,” Andrei Marcu, head of policy and regulatory affairs at Mercuria, said by phone today. “This acquisition will provide additional supply” of emission credits including from China, Latin America and Africa, he said.

The global carbon market fell 9.7 percent to $28 billion in the third quarter from $31 billion in the year-earlier quarter, according to estimates from Bloomberg New Energy Finance, the London provider of research on CO2 markets. United Nations talks have so far failed to extend or replace the 1997 Kyoto Protocol, which set emission limits for developed nations in the five years through 2012.

The MGM acquisition boosts ties with potential buyers of credits, including in Japan and potentially California, Marcu said. “Japan is where long-term relationships matter.”

Mercuria, which trades oil and other energy commodities, is beginning to examine entering the Californian carbon market, Marcu said. “You have to be in the Californian market. We are not doing this to provide credits only for the remaining two years of the Kyoto Protocol compliance period.”

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