News
Dutch Power Co Nuon Strikes Major Carbon Deal With AgCert
Source: Dow Jones
9 Nov 2004 07:23 GMT
LONDON (Dow Jones)--Dutch electricity producer Nuon NV (NUN.YY) and U.S. based AgCert International LLC have struck one of the largest carbon credit deals to date, the companies said Tuesday.
Nuon has contracted to buy several million greenhouse gas credits to meet its emissions reduction targets between 2005 and 2007 under the European Union's cap-and-trade plan, effective Jan. 1, as well as to hedge the portfolio of certain key customers.
Because companies often don't disclose details of such trades for fear of exposing either investment strategies or their carbon liabilities, it's difficult to gauge claims of record-setting volumes. Carbon-credit brokers, however, say this deal - if approaching the nearly 10 million ton purchase reported by The Wall Street Journal Europe on Monday - would be the largest ever.
The high-volume deal goes beyond fulfilling the company's own compliance needs from power generation and aims to satisfy the needs of its industrial customers, said Jogchum Brinksma, responsible for Sourcing & Trading at Nuon. That shows the commercial logic of carbon investments, the company said.
The seller, AgCert, specializes in coordinating developing-world farming projects that generate global-warming credits, formally called certified emissions reductions or CERs, on an industrial-scale.
Though no details on the value of the transaction were given, prices in the global CER market currently average $5-$6 a credit, putting this deal about $50 million. As this market is just getting started, however, trades are few and prices are dependent on the risks of each particular deal.
Demand for carbon credit deals has surged since the E.U. formally approved rules in September to link its climate emissions trading policy to the Kyoto Protocol's flexible investment mechanisms.
The official ratification of the Kyoto Protocol on Friday only reinforced that interest, as climate change targets now become binding for all parties, opening up the market to greater global participation by countries such as Japan and Canada.
By Johannah Ladd (END) Dow Jones Newswires ### |