News

January 04, 2007

EcoSecurities Is Building A Carbon Portfolio Ahead Of Phase II Trading

By Rue Swabey

The EU Emissions Trading Scheme (ETS) is a cap-and-trade scheme which aims to reduce carbon emissions by creating incentives to invest in clean energy. It does this by allocating emissions allowances to heavy industry which encourage them to gradually reduce emissions. The scheme allows industrialised countries to fund emission reduction projects in developing countries under the Clean Development Mechanism (CDM). These CDM projects generate credits known as Certified Emission Reductions (CERs) which can by used by industrial installations in the EU (known as compliance buyers) to cover any emissions over their allocated allowances. The middle man in these transactions is a carbon broker that originates, develops and trades carbon credits. The process is complex and involves a great deal of regulation. Projects need to be registered with the United Nations Framework Convention on Climate Change (UNFCCC). The registration process is difficult to navigate, delays are common and not all the projects registered generate the expected number of credits.

Oxford-based EcoSecurities has built a solid track record in its ten-year existence. It was founded in January 1997, ten months before Kyoto was signed. It raised private equity from Cargill in mid-2005 and listed on London’s AIM in December 2005 when it raised Euros 80million. EcoSecurities was an early mover on the CDM scene – it was involved in the development of 10 UN-approved CDM methodologies and registered the world’s first CDM project in 2004.

A common criticism levelled at carbon...