California’s greenhouse-gas emitters may run short of emission offsets at the beginning of the state’s carbon market, as happened at the start of Europe’s program, according to Camco International Ltd.
Credits for the state’s market from agricultural methane-cutting projects have surged 27 percent to $8.88 a metric ton since the end of June, according to prices from Karbone Inc., a New York broker. That’s near their average $8.85 a ton in the past year. California allowances for December 2013 slipped 4.3 percent to $16.50 a metric ton since June 30.
Camco is developing projects under all methodologies approved by regulators in the state, said Scott McGregor, the London emission-reduction and renewable energy project developer’s chief executive officer.
“That’s a very promising market,” McGregor said today in a phone interview. “In Europe during the first few years, there was a big shortage of available credits. The same thing is happening in California,” he said. The state’s cap-and-trade system begins in 2013.
Camco had 2.5 million tons of agricultural biogas credits under management in the U.S., according to a statement distributed today by the Regulatory News Service. They would be worth $22.2 million based on the Karbone data.
Camco shares rose 1 pence, or 24 percent, today to 5.25 pence in London as of 1:50 p.m., the highest in almost five months. They value the company at 10 million pounds ($16 million).
Camco’s net income fell in the first half and the developer said it may be able generate cash even as United Nations carbon-credit prices drop.
Net income was 1.1 million euros, or 0.59 euro cents a share, in the six months through June 30, down from 3 million euros, or 1.62 cents a share, a year earlier, Camco said in the statement.
The company’s UN credits would potentially generate a negative cash flow before 2013 of about 300,000 euros if December Certified Emission Reduction prices drop to about 1.66 euros a ton, it said. CERs were up 6.4 percent to 2.16 euros a ton today on the ICE Futures Europe exchange in London, having dropped 75 percent in the past year. At a price of 2.66 euros a ton, the cash flow would jump to 1.9 million euros, it said.
Camco will seek to sell its credits for delivery after April next year, after which certain industrial-gas credits are banned for use in the European Union carbon market, McGregor said. Availability of those banned credits is currently driving credits lower, he said.
Camco is looking to boost revenue from Australia and other nations including China, he said. A plan for Australia and the EU to link their carbon markets may encourage Europe to adjust its greenhouse-gas cap on a rolling basis based on the bloc’s economic output, as the southern-hemisphere nation plans for its program, he said.