News

November 17, 2008

Trading Emissions Is Upbeat On Carbon Despite Recent Price Weakness

By Rue Swabey

The global carbon market grew by 81 per cent to US$87 billion during the first nine months of 2008. Fast growth is expected to continue to 2012 by which time it the value of the market is forecast to be US$550 billion. But recently the carbon price has fallen 19 per cent to €20.00 as the slowing global economy fuels concerns that demand for carbon will fall. This price weakness is likely to last some time and may result in a widening of the spread between the more risky primary carbon credits and the secondary market. This is frustrating for the carbon brokers and aggregators who had expected to start trading carbon credits actively following the long-awaited connection of the Community Independent Transaction Log (CITL) and the International Transaction Log (ITL) in mid-October.

On 16th October, Aim-traded Trading Emissions reported a 28 per cent increase in pre-tax profits to £194 million for the period to 30th June. Trading Emissions is a closed-end investment company that focuses on carbon credits and renewable energy projects. It is a long-only fund that seeks to profit from the arbitrage between the primary and secondary markets for carbon credits. But the net profit figure of £194 million is misleading. It’s not a cash-based number and mostly reflects a £237...