News

September 29, 2008

EcoSecurities Seeks To Regain Market Confidence With Prudent Portfolio Management And Cost Control

By Rue Swabey

The carbon market is showing signs of resilience among the general economic turmoil and the fundamentals point to an increase in the carbon price in the coming years. Delays in the issuance of carbon credits, commonly known as Certified Emission Reductions or CERs, are driving carbon prices higher. Increases in gas prices are also helping to boost carbon prices as these increases are forcing some generators to switch to coal-fired generation which emits significantly more carbon than does gas-fired generation. This has led to the carbon price rising 13 per cent to €23.50 over the last year. But Aim-traded carbon broker EcoSecurities has yet to regain the market’s confidence after it shaved 23 per cent off its carbon portfolio in November 2007. Although the reduction was widely portrayed by the press as company-specific, there have in fact been write downs across the industry.

The reason why carbon brokers and aggregators have had to write down their portfolios is because the Executive Board of the Clean Development Mechanism (CDM), the mechanism that allows developed countries to create carbon credits through carbon-reduction programmes in developing countries, is slow at approving new carbon emission reduction projects. Among the Aim-traded aggregators EcoSecurities is particularly exposed to the slow, bureaucratic and, at times, unpredictable CDM project cycle, as...