Carbon emissions exchanges are thriving, making as much as 2 million euros ($2.55 million) a week in revenues, Reuters data shows, just as European industry struggles to survive in the wake of the economic downturn.
Under the European Union's Emissions Trading Scheme, heavy industry is allotted an annual quota of emissions permits called EU Allowances (EUAs), and are forced to buy more, often over carbon exchanges, if they emit more carbon dioxide than allowed.
But cash-strapped firms seeking to raise funds in the short-term have been dumping 2008 EUAs on the spot market with a view to borrowing from their 2009 quota in April when last year's permits are due to be handed in.
Spot prices for EUAs trading on Paris-based BlueNext BNXCO2-2, Europe's main spot EUA exchange, have fallen by almost 50 percent so far this year to around 8.30 euros a tonne.
Daily spot volumes, on the other hand, have more than doubled since last November, meaning more revenues for the exchanges that trade them. "With people wanting to hold more liquid positions, the spot market is a natural home," BlueNext's Marketing and Communications Director Keiron Allen said in an interview, adding BlueNext holds a 98 percent share of EUA spot trading.
The recent surge in selling has seen BlueNext's volumes average 7.3 million tonnes so far in 2009, and top 10 million tonnes in each of the past five trading days.
BlueNext, a joint venture between NYSE Euronext (NYX.PA) and France's Caisse des Depots, charges 0.017 euros per transaction.
Two sides to every trade means revenues of 0.034 euros per tonne of CO2 traded, or a daily average of around 250,000 euros....MORE