World Environment News
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UK emissions market stays small as demand wanes

Date: 20-Jan-03
Country: UK

Volume traded has reached 1.2 million tonnes of carbon dioxide equivalent, though most trades are still small parcels of under 1,000 tonnes, brokers said.

The trading scheme enables companies that cut greenhouse gas emissions above government-agreed targets to sell credits to those unable to meet the reductions.

Thirty-four companies directly entered the scheme, though only 12 of these have been actively trading, with energy major Shell (RD.AS) (SHEL.L) the main player.

Another 6,000 companies are expected to enter trading as they risk losing a tax rebate on energy use if they miss their reduction target, under the Climate Change Levy scheme, with the emissions verification period finishing in mid-February.

After a price spike up to 12.50 pounds ($20.23) per tonne in October as companies rushed to buy credits to ensure meeting targets, prices have fallen back to around 4.50 pounds ($7.28) as demand has waned, brokers said.

"There's not much on the buy side, as Climate Change Levy companies haven't come to the table so far in the way we thought they would," said John Molloy of brokers TFS.

The drive to cut greenhouse gas emissions, blamed for global warming, comes as part of commitments to the U.N. Kyoto Protocol.

European Union environment ministers agreed last month to create the world's first mandatory international trading system in the EU from 2005, which analysts said could be worth up to eight billion euros by 2007.

The U.S. pulled out of the deal, although a group of companies in Chicago announced last week a voluntary four-year pilot trading scheme.

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