Emissions trading
Carbon credits were designed to combat industrial greenhouse gas emissions.
Trading carbon credits allows businesses and industries to increase their stipulated CO2 emissions limits, or transfer any excess capacity they don't use.
The world's largest emissions trading system is the European Union Emissions Trading Scheme (EU ETS), which covers 25 countries. Over 225 million EU allowances were traded in 2005, and this figure is widely expected to rise although values remain volatile.
The bulk of transactions are in the Over-the-Counter (OTC) market. Around 30% of allowances are traded on exchanges of which the European Climate Exchange (ECX) attracts the most liquidity.
ABN AMRO provides access to the OTC by acting as counterparty. We accommodate spot and forwards, as well as OTC structures where the settlement price is based on average closing prices of the ECX of the preceding month or period. We trade EU allowances under all major contracts, including ISDA, IETA and EFET. For single trades we use a standard long form confirmation document.
Many of our clients fall under the EU ETS, and encompass a liquid pool of pre-qualified buyers interested in purchasing carbon credits from project-based 'flexible mechanisms'. These include the Clean Development Mechanism (projects to reduce emissions mostly in developing economies) and Joint Implementation (energy efficiency schemes or reforestation). Project developers can access our pool of buyers through a single master agreement with ABN AMRO rather than multiple agreements with multiple buyers.
Our commodity team spans three continents, with offices in London, New York, Singapore and Sydney.
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