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Alternative Market Briefing

Carbon and emissions trading in Europe, Part Two - Some foresee a perfect storm and carbon challenges for the energy sector, Climate change revisited

Thursday, June 25, 2009

Benedicte Gravrand, Opalesque London:

Following yesterday's Part One - How the Europeans do it: Source.

Two of the financial groups that bet on climate change are in focus today; one foresees a price hike in emissions allowances in the near future, the other bets on oil and gas firms that are prepared for the forthcoming low-carbon economy.

Akur Partners sees the silver lining in an approaching perfect storm Tom Frost, who has a PhD in Climate Change and who is a founding partner at Akur Parners, a new finance and equity capital markets advisory firm based in London, wrote an interesting presentation on the carbon markets in Europe, forecasting a 'perfect storm' (an analogy for an event where a combination of circumstances will aggravate a situation drastically.)

The EU Emissions Trading Scheme (ETS) is the world's most advanced and far reaching market designed to tackle climate change, he notes. It is intended to give industry (which must participate) flexibility and control to choose how to meet emissions reductions targets, whether through investment or the trading of emissions allowances. Currently worth over Eur20bn, it is lightly regulated and in its infancy.

During ETS' Phase I (2005-07), the EU over-supplied emissions allowance - bringing prices down to zero. In the current Phase II (2008-12......................

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