Japan expects uptrend in UN carbon offset prices -survey

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TOKYO, Jan 30 (Reuters) - Japanese buyers and traders of U.N. carbon offsets expect prices of the credits to rise this year in domestic over-the-counter trade after plunging in European trade in recent months, a survey released on Friday said.

Japan’s government and big corporates are large buyers of the offsets, called Certified Emissions Reductions (CERs), which can be used to help the country meet its U.N. emissions obligations.

In its survey, the state-backed Japan Bank for International Cooperation [JBIC.UL] found that 17 of 18 buyers and traders from manufacturers, banks and trading firms forecast rises of 14 to 46 percent.

JBIC is one of the leading information providers on CERs.

Japan is the world’s fifth-largest greenhouse gas emitter and is well above its emissions target under the U.N.’s Kyoto Protocol. Japan has a target of cutting its emissions by 6 percent below 1990 levels between 2008 and 2012.

It now needs to cut emissions by an estimated 13.5 percent to reach its Kyoto goal.

The middle rate of indicated bids and asks for issued CERs, as collected and calculated by JBIC and a media company, stood at 1,240.9 yen ($13.8) this week, the lowest ever level.

In London, the benchmark futures contract on CERs CEREZ9 traded around 10.5 euros ($13.65) this week after falling to 9.5 euros last week.

Japan lacks derivatives markets to hedge against CERs.

The JBIC survey, obtained by Reuters, produced a simple average for the middle rate at 2,000 yen at the end of this year, up 16.5 percent from 1,716.8 yen on Dec. 22.

In Japan’s first such survey, the estimates ranged from 1,577 yen to 2,500 yen. JBIC conducted the survey in the second week of January, when the euro was around 125 yen <EURJPY=R>.

Back in July, the middle rate, called the Nikkei-JBIC carbon quotation index, hit a high of 3,821.5 yen on a rally in energy prices. It was first floated at 2,705.1 yen on April 21.

Friday’s survey also showed buyers and traders considered energy prices the biggest driver for the yen-based index, followed by the outlook of the global economy and currency rates.

In a joint venture with Nikkei Digital Media, JBIC updates indicated ask and bid prices for CERs with the help of eight carbon traders.