Carbon trading boss rejects fears of slowdown in pollution permits business

Terry Macalister
The Guardian,
Friday September 19 2008

There has been a 150% increase in the volumes of carbon trading on the European Climate Exchange in the first six months of the year and its boss predicted there would be further growth despite a global economic slowdown.
Shares in the parent company - UK-based Climate Exchange - briefly added to this week's falls in early trading yesterday amid widespread concern that the company's rapid growth cannot be sustained in a world hit by the credit crunch. The group published a first half pre-tax loss of £304,000, well down from the £2.8m deficit it ran up in the same period in 2007, while operating revenues nearly doubled to £10.5m. "We've had a great first half. I'm pretty bullish about the foreseeable future," said Neil Eckert, chief executive, who said he had seen no slowdown in business.
Climate Exchange owns and operates a carbon bourse in Europe, ECX, and Chicago while also having joint ventures in China, India, and Japan. Shares in the parent group fell almost 45% from a three month high of £20.41 in August, and analysts have expressed concerns about the company's rapid growth. Yesterday the shares turned up after an early 1.5% fall. By the close they had risen 70p to £12.
"Climate Exchange has been growing like stink, but there are a lot of ifs [surrounding emissions trading] and this staggering valuation takes some justification," one analyst said.
"Volumes have been strong and we have no exposure to sub-prime," Eckert said, referring to the mortgage-related debt that has led to a meltdown in the global financial markets.
Average monthly volumes for European Union allowances, credits traded under the EU's emissions trading scheme, almost doubled to 167.3m, representing 88% of all such exchange-traded volumes in Europe. Volumes for CERs, the UN-issued emissions offsets generated by clean energy projects in developing countries, averaged 47.2m per month since being launched by the ECX in March, or 84% of all European exchange-traded volumes. "Ironically, the one time you really need an exchange is when credit is so frightening," said Eckert in reference to the global financial crisis.
The Climate Exchange boss was most excited by China's emissions trading plans, saying Climate Exchange was the only western bourse with a shareholding in an exchange in China. In July, Climate Exchange announced a pact with Chinese National Petroleum Corporation Asset Management and the city of Tianjin to launch a new trading platform. "China's going to be the biggest market ... it'll take a while for them to do it, but once they do it will be a monster," Eckert said.