European Energy Exchange (EEX) to launch EU aviation carbon permits in April
The European Energy Exchange will launch a derivatives market for EU carbon permits for airlines in April and a spot market by mid-year. They say this opens its market for a new group of participants. So-called EU Aviation Allowances (EUAA) can only be used by airlines to comply with the EU’s emissions trading scheme, the world’s biggest carbon market. Leipzig-based EEX is not alone in offering trade in EUAAs. Last month, commodity Exchange Bratislava (CEB) said it would launch trade in EU aviation emissions permits before the end of February. London-based ICE Futures Europe accounts for about 90% of all traded volume in EU carbon permits
February 7th, 2012 (Carbon Future News)
LONDON Feb 7 (Reuters) – The European Energy Exchange (EEX) on Tuesday announced it would launch a derivatives market for European Union carbon permits for airlines in April and a spot market by mid-year.
“With this step EEX makes an active contribution to the further development of EU emissions trading and opens its market for a new group of participants,” the EEX said in a statement.
As of Jan. 1 this year, all airlines flying to and from Europe have to cover their carbon dioxide emissions with emission allowances.
So-called EU Aviation Allowances (EUAA) can only be used by airlines to comply with the EU’s emissions trading scheme, the world’s biggest carbon market.
Critics of the scheme, which covers around half of the 27-nation bloc’s carbon dioxide emissions, include non-EU countries such as China, India and the United States.
They argue the EU is exceeding its legal jurisdiction by calculating the carbon cost over the whole flight, not just within Europe. In December, Europe’s highest court found that
the EU plan was within international law.
China’s Foreign Ministry said on Tuesday it hoped talks with the EU could resolve a dispute over the region’s airline emissions fee scheme. A day earlier China said its airlines were banned from participating in the carbon scheme.
Leipzig-based EEX is not alone in offering trade in EUAAs. Last month, commodity Exchange Bratislava (CEB) said it would launch trade in EU aviation emissions permits before the end of February.
Henrik Hasselknippe, a managing director at the Green Exchange (GreenX), said he was following the developments: “We will launch the relevant products in due time.”
He was unable to provide specific details on the timing.
“It is encouraging to see the momentum building for the aviation emissions market, although we do note that there are still some uncertainties on the international level,” he told Reuters.
London-based ICE Futures Europe accounts for about 90% of all traded volume in EU carbon permits and U.N.-backed offset credits.
A spokesperson from ICE Futures Europe was not immediately available for comment.
Wikipedia on trading of carbon allowances:
The operators within the ETS may reassign or trade their allowances by several means:
- privately, moving allowances between operators within a company and across national borders
- over the counter, using a broker to privately match buyers and sellers
- trading on the spot market of one of Europe’s climate exchanges.
Like any other financial instrument, trading consists of matching buyers and sellers between members of the exchange and then settling by depositing a valid allowance in exchange for the agreed financial consideration. Much like a stock market, companies and private individuals can trade through brokers who are listed on the exchange, and need not be regulated operators.
When each change of ownership of an allowance is proposed, the national registry and the European Commission are informed in order for them to validate the transaction. During Phase II of the EU ETS the UNFCCC also validates the allowance and any change that alters the distribution within each national allocation plan.
On January 19, 2011, the EU emissions spot market for pollution permits was closed after computer hackers stole 28 to 30 million euros ($41.12 million) worth of emissions allowances from the national registries of several European countries within a few day time period. The Czech Registry for Emissions Trading was especially hard hit with 7 million euros worth of allowances stolen by hackers from Austria, the Czech Republic, Greece, Estonia and Poland. A phishing scam is suspected to have enabled hackers to log into unsuspecting companies’ carbon credit accounts and transfer the allowances to themselves, allowing them to then be sold.
The European Commission said it would “proceed to determine together with national authorities what minimum security measures need to be put in place before the suspension of a registry can be lifted.” Maria Kokkonen, E.C. spokeswoman for climate issues, said that national registries can be reopened once sufficient security measures have been enacted and member countries submit to the EC a report of their IT security protocol.
and much more at http://en.wikipedia.org/wiki/European_Union_Emission_Trading_Scheme
Wikipedia on spot markets:
The spot market or cash market is a public financial market, in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market in which delivery is due at a later date. A spot market can be:
Spot markets can operate wherever the infrastructure exists to conduct the transaction. The spot market for most instruments exists primarily on the Internet.