Trading rise boosts Climate Exchange

By Fiona Harvey, Environment Correspondent

Updated: 2:10 a.m. ET Sept. 20, 2007

Higher trading volumes at Climate Exchange, which operates exchanges to trade in greenhouse gases on both sides of the Atlantic, helped tip the company into operation profit.

The increase pushed the company into a pro forma operating profit for this year's first half of £725,822, compared with a loss of £1.9m for the six months to June 30 2006.

Revenues rose from £2.7m for the first six months of last year to £5.8m, while the company's operating expenses increased at a slower rate, from £4.6m to £5.1m.

The company's pre-tax loss for the period was £2.7m, compared with a small profit last year of £21,118, but it would have been a profit of £309,498 (£2m loss) without taking into accountshare-based payments of £3.1m to staff. These future payments, dominated by chief executive Neil Eckert, depend on performance.

Climate Exchange said the increase of 155 per cent in trading volumes on its European Climate Exchange, to nearly 4m tonnes a day, and the doubling of volumes on its Chicago Climate Exchange were evidence of strong and rapidly growing interest in trading greenhouse gases.

Mr Eckert said: "One of the features of an exchange is scalability. We can launch new contracts at a marginal cost."

He said the company had no immediate plans for acquisitions with £12.5m on its balance sheet, which formed "a nice cushion".

However, he held out the possibility that money would be returned to shareholders in the future. Climate Exchange services the growing market that deals with greenhouse gas emissions.

Under the Kyoto protocol, countries and companies can trade in "carbon credits", generated from projects such as wind farms or solar energy plants, that cut greenhouse gas emissions.

Under the EU's emissions trading system, companies are issued with permits for the amount of carbon dioxide they may emit each year. These permits can be bought and sold.

These systems have created a market worth $30bn (£15bn) last year, according to the World Bank. The EUmarket accounted for $5bn (£2.5bn) traded under the Kyoto protocol. The shares rose 65p to £15.30.

In addition, some companies in countries where greenhouse gases are not regulated choose to engage in carbon trading voluntarily. The Chicago Climate Exchange caters to such companies in the US, which has rejected the Kyoto protocol.

The voluntary market in carbon credits is forecast to expand to $4bn a year by 2010.

Print this Email this Blog this  IM this

MORE FROM FINANCIAL TIMES HIGHLIGHTS

Financial Times Highlights Section Front

Democracy in retreat around the world   Wall St cautious as dollar hits new lows   China chapter of Dell's retail adventure opens   GM turnround jeopardised by strike   Buyback prospects lift Deutsche Börse in uneasy session for financial sector   Brussels split over telecoms   Revenue renews push on offshore accounts   France alters way it reports jobless figures   BP set for shake-up amid 'dreadful' revenues   Goldman to advise Treasury on Rock Financial Times Highlights Section Front   Add Financial Times Highlights headlines to your news reader: