Anyone got any views on carbon emissions trading?

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Old Apr 18, 2007, 9:58am   #1
 
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Anyone got any views on carbon emissions trading?

After the collapse of the Dec 07 carbon market, anyone got any info on the Dec 08 contract.

I'm still trying to work out why there is such a big difference between the two? I'm assuming allocated credits for '08 will be fewer than '07 thus avoiding an oversupply situation?

Any feedback would be gratefully recieved

Juxey2000
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Old Apr 18, 2007, 12:49pm   #2
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That is the reason, each falls into a different phase of the EU emissions program. Phase 1 was over allocated as it relied on data from the companies receiving the credits so they just abused the system. Phase 2 is 08-12 and will tighten things up a little.
Jury is still out on how far 08's can go but people do appear to be buying dips and i managed to take a little cash out. Problem with the market is that there is a constant political liquidity about it and if anything falls apart in the negotiations you could find a collapse like we saw last year. Other issue is the liquidity available on exchange. It is far thinner than the OTC and should any unforeseen decision be announced you will be left hanging with no bid or offer on the exchange. If you trade it you need to be aware of the execution risk and keep ear open to the news. Lot of businesses have picked up CER's in Russia and will try to sell them in EU for a premium. Nobody clear yet how over/under supplied Eu may be for Dec08.
Sorry for the cautionary tale but there is easier money elsewhere. this is primarily a business for the energy companies, carbon funds and banks right now who can get their grubby fingers on the physicals.
Good luck.
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Old Apr 18, 2007, 2:31pm   #3
 
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juxey2000 started this thread Thanks for that, its what I suspected. I was considering buying the spread but with all the uncertanty, I think I'll leave well alone.

Anyone else got any views?

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Old Apr 18, 2007, 3:01pm   #4
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The trade was to sell that spread. Buying dec7 now is a mugs trade, it is not worth paper it is written on.
If there was one trade it is buying dips in dec8. That is all there is and that is risky enough.
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