Carbon trading prices stabilise

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The outlook for carbon trading companies has improved somewhat after a rocky start to the year, as carbon prices have firmed after sharp falls.

Camco International and Trading Emissions, two of a small clutch of Aim-listed carbon traders, have both produced some good news for investors, with the former reporting a maiden profit and the latter a maiden dividend.

The prices paid for permits to produce carbon under the European Union’s emissions trading scheme suffered precipitous falls last December and in the early part of this year, tumbling from about €30 (£27) last summer to €15 in December before a fresh plunge to only about €8 in mid-February.

In recent weeks, the prices have recovered to about €13.30, the analyst group Point Carbon estimates.

The recovery encourages carbon traders. They are affected by the prices, as they amass portfolios of carbon credits to be sold to participants in the EU scheme. The credits are issued by the United Nations to developing world projects that cut emissions, such as wind farms or solar panels.

Camco reported, just before Easter, a pre-tax profit of €2.2m for the year ended December 31, 2008, a big improvement on the previous year’s loss of €12.2m. Turnover rose fourfold from €10.4m to €41.5m.

Shares in Camco closed at 10p before Easter. It failed to make up all the ground lost in February, when shares fell from 16p to 8p. It also issued 3.4m new shares.

Falling carbon prices led to a loss for Trading Emissions of £126.7m in the six months to December 31, compared with a profit of £74.4m for the same period last year.

But the company showed a strong cash balance of £202.6m, up from £139.2m, after sales of carbon credits and announced a maiden dividend to shareholders of 1.5p per share, to be paid on May 1 to shareholders on the register at April 14, and for the full year it intends to pay 4p to 5p per share.

Shares in the carbon trader closed on April 9 at 75.75p, a good recovery after bumping along in early March at about 65p but still below January’s more than 85p.

Trading Emissions has a fixed life and is scheduled to be wound up at the end of 2012, when current provisions of the Kyoto protocol, by which UN credits are issued, will lapse. Neil Eckert, chairman, said if carbon prices were €25 then, the annualised return would be 19 per cent.

Mr Eckert, also chief executive of another AIM-listed carbon specialist, Climate Exchange, said: “[The rest of] 2009 will be a pivotal year for the carbon markets and we are presented with a unique business opportunity to deliver exceptional returns to all investors.”