Companies overspend on carbon allowances

EU companies could have saved up to a €1 billion by using more carbon offset credits last year.
Data released by the EU today showed factories and companies regulated by the region’s cap-and-trade market used 81.7 million certified emission reduction (CER) credits last year.
But the installations could have used another 201.1 million CERs to meet their carbon targets for 2008, the first year of phase two of the EU emission trading scheme (ETS), which runs until 2012.
Instead, companies appear to have preferred to use EU allowances for compliance needs, which were more expensive than their CER counterparts in 2008.

Missing out

“It does seem some companies are missing out on an opportunity,” said Mark Lewis, an analyst at Deutsche Bank.

“But if industrial sectors were not convinced about buying CERs in the first half of 2008, when they were €6-8 cheaper than EUAs, then what’s going to force them to get out there now?” he added.

At last night’s close, the difference between spot EUAs and CERs was €2.25 in the cleared broker market.

The difference between the 2008 EUA and 2008 CER contracts last year was an average of around €5.15, according to Point Carbon News estimates.

Swapping limits

Companies can swap EUAs for CERs to meet a certain amount of their ETS cap.
Limits vary between member states, but an average of 13.4 per cent of national caps are allowed to be met using the credits, Point Carbon data showed.
German and Spanish installations represented a little over half of all surrendered CERs among 29 nations covered by the cap-and-trade scheme.
Germany, the biggest greenhouse gas polluter in the EU, used the highest volume of CERs last year.
The country’s installations surrendered 23.7 million CERs to meet carbon caps, which was 26 per cent of the 90.6 million CERs they were entitled to meet their caps with.
Meanwhile Spanish installations surrendered almost 18.3 million carbon credits to meet targets.