Isramart : Carbon-trading delays prompt market exit

Isramart news:
Newedge Group, one of the world's biggest independent futures brokers, has closed its energy and environmental markets business in Australia after the country's carbon-trading reforms stalled.

Newedge Australia Chief Executive Nick Scarf said the energy and environmental division had ceased operations yesterday, according to an email sent to Reuters.

Scarf was not immediately available for further comment.

The closure of Newedge, a joint venture between Credit Agricole CIB and Societe Generale, comes as Australia's "green market" is in disarray after the Senate twice rejected the government's proposed emissions trading scheme.

The scheme would have put a price on carbon emissions in Australia, one of the world's highest polluters per capita, and created a market with billions of dollars of annual turnover.

The government wants carbon trading to start in July 2011, covering the top 1,000 polluters and forcing them to buy or receive permits for their emissions.

The scheme is expected to come up for a third vote in 2010 but faces almost certain defeat and investors have largely given up on it.

Concerns are also abundant about trading in renewable energy certificates (RECs), even after the government reshaped the scheme on February 26 to require 20 per cent of energy to come from renewable sources by 2020.

"There's still regulatory uncertainty about the whole scheme and that's one thing the market doesn't like, so there's very low liquidity," said a trader, who asked not to be named.

The government revised its clean energy scheme to separate the household market from large renewable project investments.

The trader said government incentives to install household solar panels and heat pumps, which generated RECs, had oversupplied the market, discouraging investment in bigger renewable schemes, such as wind farms.

REC prices jumped to around $42 each from $30 prior to the February 26 announcement but remain below a peak of around $53 a year ago. They slumped to a low of $27.75 in early October 2009 because of the oversupplied market. Each certificate represents one megawatt-hour of electricity generated from renewable energy.