Nord Pool Says Has 7 Pct of European CO2 Trade
Date: 01-Mar-05
Country: NORWAY
Author: John Acher
Nord Pool became the first exchange in the world to launch exchange-based trading of European CO2 allowances when it listed three forward contracts on Feb. 11. Several other exchanges are expected to follow suit quickly.
Nord Pool Chief Executive Torger Lien said that permits for a total of 371,000 tonnes of CO2 were traded on Nord Pool from the start-up to the end of trade on Friday.
During those same 11 trading days, a total of about five million tonnes in CO2 permits was traded over the counter in Europe, Nord Pool estimated.
"This is very good in the start-up phase," Lien said in a briefing for journalists coinciding with the official inauguration of Nord Pool's CO2 market.
CO2 permits firmed on on Monday. The most liquid contract, the December-05, ended up 1.1 percent at 9.55 euros ($12.66) per tonne. It is up almost 34 percent from a price of 7.15 euros in the opening trade on Nord Pool on Feb. 11.
The market is potentially huge because permits for 2.2 billion tonnes of CO2 emissions have been issued to industry under the European Union's compulsory scheme started in January.
That scheme creates incentives to cut emissions of CO2, the main greenhouse gas blamed by many scientists for global warming. It is also meant to push countries towards their emissions reduction goals agreed by states under the Kyoto protocol, which took effect on Feb. 16.
The permits traded on Nord Pool are called European Union Allowances (EUAs) and the minimum contract size is for emissions of 1,000 tonnes of CO2. Nord Pool has listed three forward contracts for physical delivery in December 2005, December 2006
and December 2007.
21 TRADING MEMBERS TO DATE
So far Nord Pool has enrolled 21 members to trade CO2 permits, but Lien said the exchange hopes to have 50 signed up within the first half year.
The enrollees are from seven countries -- Norway, Sweden, Finland, Denmark, Germany, France and the Netherlands -- and include major energy groups like Germany's RWE, France's EDF and Norway's Statoil, and small trading firms.
"I think trade will pick up in April or May when the other markets in Europe start," Lien told Reuters.
Nord Pool is one of at least five European exchanges vying to grab a share of the CO2 allowances market.
Others include Germany's European Energy Exchange (EEX), Austria's EXAA and Britain's International Petroleum Exchange which has set up an emissions trading venture -- the European Climate Exchange -- with Chicago's Climate Exchange.
European bourse operator Euronext has said it plans to launch an emissions contract with partners Powernext and Caisse des Depots et Consignations.
Nord Pool's chairman Odd Haakon Hoelsaeter told Reuters."We are the first...We will have competitors in the future, but not now."
"We have to try to take the benefits of being the frontrunner," Hoelsaeter said.