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11/08/2010 / UNITED KINGDOM / COMMODITIES
Interview: "Crédit Agricole CIB believes that carbon trading will become a global market"
Ian Thomas, Senior Emissions Trader and Albert Schootstra, Emissions Sales & Origination, present the carbon trading and the role of Crédit Agricole CIB in this market.
When did Crédit Agricole CIB start to work on carbon trading?
Ian Thomas (IT): In 2005 with the launch of the European Union Emissions Trading Scheme (EU ETS). However, business really started to pick up after the launch of the second step of EU ETS in 2008. We now have a significant presence in the market, trading on behalf of our extensive list of leading sovereign, supranational, financial and corporate counterparts in the emissions markets.Why having set up this activity?
IT: As the world moves towards a greener society it is vital for Crédit Agricole to be present in emissions trading in order to support its existing business. In the case of the EU ETS the key sectors involved are power and gas, oil, pulp and paper, metals and construction - all areas where Crédit Agricole CIB has a market leading financing position. In 2012 any aircraft utilising EU airspace will have to purchase emission certificates.
In the developing world the potential creation of emission certificates (certified emission reductions) is very important in the financing of new industrial processes. Crédit Agricole CIB is active in this market and has financed one of the first such projects in Malana in India.
In very practical terms, could you explain what is carbon compensation trading?
Albert Schootstra (AS): It regulates the amount of emissions that are being emitted by giving companies the rights to emit slightly less then they would normally. To fulfill its obligation the company has several options; the price is the driver of that decision. If the price to buy one ton of CO2 is higher than the cost of the company to save one ton of CO2 then you would invest otherwise it is better to buy one allowance in the market. The EU commission set up an European trading scheme where a single price is set by the market and where companies can benefit from the lowest price needed to save one ton of CO2. To give an example: if there is a lot of wind in Scandinavia that will replace and compensate more polluting methods of generating power and will drive the price down and will give the opportunity for a Spanish company to benefit from that lower price to compensate.What are your tasks?
AS: My role is to make sure Crédit Agricole CIB is expanding its client base and expertise in the carbon market. My main focus is the clients of the Bank but I also assist internally with other desks to improve our capabilities and expertise. Because Crédit Agricole CIB is active in many areas that have a link with carbon, in some way there is a lot of potential that we can work with.
IT: As the emissions trader, it is my role to manage the carbon risks of the Bank and to ensure that our clients have access to the best market prices and knowledge.
What are the future prospects of this activity?
AS: Currently the most active trading scheme is the EU-ETS in the European Union. Talks are underway to create a successor to the Kyoto protocol that will expire in 2012. New regional activities in New Zealand, Korea, Japan and even in the United States are starting soon or have started, but the most successful path would be a global agreement. Crédit Agricole CIB believes carbon emissions trading will become a global market which will continue to grow. Recent events make it clearer that the world needs sustainable sources of power. And carbon trading is one of the best tools to reach that target.
Ian Thomas, Senior Emissions Trader and Albert Schootstra, Emissions Sales & Origination
