Trading Emissions cautions on pipeline

By Fiona Harvey, in London
Published: October 16 2008 19:43

Shares in Trading Emissions bucked the falling London market as annual profits at the Aim-listed carbon trader rose 28 per cent and it confirmed it would pay a dividend next year.
The company, which generates carbon credits from projects such as renewable energy installations in developing countries, reported pre-tax profits for the year to June 30 up from £152m to £194m. Turnover was £4m and the company’s portfolio of carbon credits rose in value from £171m to £218m.
The company was also boosted by the news that the “transaction log” – a link between the European Union’s emissions trading scheme and the UN – was now running after months of delay. This would enable carbon traders to buy and sell UN credits within the EU system. “It will bring more people into the market,” said Simon Shaw, a carbon credit investor adviser to the company.
However, its pipeline of carbon credit projects is slowing, which could constrain revenues.
Carbon credits are issued by the UN to projects, such as wind farms, which cut emissions in the developing world.
The credits, fetching between €15 and €20 a tonne, are bought by developed country governments, to count towards their Kyoto protocol targets, or by companies in the EU’s emissions trading scheme, which use the credits to enlarge their quota of emissions.
The current provisions of the Kyoto protocol expire in 2012 and, with no new framework as yet to replace it, developers have become reluctant to bring forward new projects.
Mr Shaw added: “This is constraining our horizons. We are still doing projects, but more mature projects than earlier stage projects.”
Shares rose 15¾p to 118p.
Copyright The Financial Times Limited 2008