Mabanaft BV, the Rotterdam-based commodities trader, closed its carbon trading desk because of “poor market conditions” and will shift its portfolio of emissions-cutting projects to another company within its parent.
“We have exited carbon trading activity due to poor market conditions and the fact that it is now evident that there is no international agreement in sight,” Daniel Weisser, managing director of Mabagas GmbH & Co., the renewable energy division of Mabanaft parent company Marquard & Bahls AG, said today by phone from Hamburg.
European Union carbon permits for December declined 41 percent to 5.19 euros ($6.02) a metric ton in the past year on London’s ICE Futures Europe exchange as the region’s sputtering economy damped demand for permits. The European Commission, the market’s regulator, is seeking to limit an oversupply of allowances that may reach 1.6 billion tons as of the end of 2012, according to UniCredit Bank AG in Munich.
Nations meeting in Doha in December agreed to extend the Kyoto Protocol, which limits greenhouse-gas emissions by developed countries, through 2020, though Russia, Canada and Japan dropped out of the agreement. Countries are scheduled to reach an agreement starting in 2021 by 2015.
The decision to restructure the carbon business within the Marquard & Bahls group was taken in January, Weisser said.
“Mabanaft is quitting speculative trading, to the extent that we were in it,” Weisser said. “Our activities were mostly related to risk management and hedging strategies to support our project portfolio.”
The company has a portfolio of three emissions-cutting projects registered under the United Nations Clean Development Mechanism, according to UN data compiled by Bloomberg.
“We have an interesting portfolio of CDM projects and programs of activities in the sectors of energy efficiency and renewable energy, which we will keep and manage,” Weisser said. “We will continue with so-called origination as far as the market allows given the extremely low CER price level.”
United Nations Certified Emission Reductions are created by climate protection projects in developing countries, and may be used by factories and power stations in the European Union to meet part of their cap on carbon discharges. CERs for December tumbled 93 percent in the past year to 34 euro cents on ICE Futures Europe.
Mabanaft’s carbon team of six will remain with the company until mid-year, Weisser said. Efforts are being made to find new positions for them within the Marquard & Bahls group, he said.
“The business will be integrated into one of Mabanaft’s sister companies in Hamburg as soon as possible,” he said.
Mabanaft is a unit of Hamburg-based Marquard & Bahls, a closely held oil company.