A carbon credit is a tradable monetary security which is equal to one ton of a greenhouse gas, such as carbon dioxide. Due to greenhouse gas restrictions put in place by various countries based on the Kyoto Protocol quotas, businesses that are generating emissions that are less than their quotas can sell their credits to companies which are unable to stay below their quotas. The proceeds in essence reimburse the selling company for reducing their emissions. Trading also takes place between countries.
There are four major exchanges for the trading of carbon credits: the Chicago Climate Exchange in the United States, the European Climate Exchange in England, Nord Pool in Norway, and PowerNext in France. Louis Redshaw, who is in charge of environmental markets at Barclays Capital, said “Carbon will be the world's biggest commodity market and it could become the world's biggest market overall." Fortunately, there are several companies which are connected to carbon emissions trading. Many of these are low cap stocks and should be considered very speculative.
Agcert International (AGCTF.PK) is involved in the production and sale of greenhouse gas emission reductions and Certified Emission Reductions [CERs]. The company generated a loss per share of €0.58 cents for 2006.
Alkane Energy PLC (ALKAF.PK) builds and operates methane harnessing systems from man-made sources for renewable generation of electricity with the potential of the trading of carbon emission reduction certificates through the EU ETS from 2008, if the European Union Emissions Trading Scheme [ETS] is expanded to cover methane. Operating profit and net profit were positive for the latest year, versus losses for the previous year.
Camco International (CAMCF.PK) identifies and develops projects for industrial companies that reduce greenhouse gas emissions and then assists in the sale and delivery of carbon credits into the international market. Losses per share increased substantially in 2006 over 2005.
Climate Exchange PLC (CXCHF.PK) owns the Chicago Climate Exchange, Inc., which trades in the emissions of six gasses including carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, perfluorocarbons and hydrofluorocarbons, and the European Climate Exchange, which provides futures contracts and options contracts of emissions, known as Carbon Financial Instruments. Goldman Sachs has taken a major position in this company. Pro-forma operating loss was reduced by 30% in the latest reported period.
Econergy International PLC (ECONF.PK) is involved in the origination, development and marketing of Clean Development Mechanism [CDM] projects. Although revenues increased for the latest reported year, net after tax loss went up.
Ecosecurities Group (ECGUF.PK) assists companies to create and purchase carbon credits from projects that reduce emissions of greenhouse gases. Although the pre-tax loss increased for the year 2006, diluted loss per share dropped.
Trading Emissions PLC (TRDGF.PK) is a closed end fund that was established to acquire tradable environmental instruments in projects developed under the Clean Development Mechanism [CDM] and Joint Implementation [JI] of the Kyoto Protocol. The company had a pretax profit of 2.9 million British pounds for the first half of the fiscal year.
Author owns CXCHF.PK.
By Fred Fuld at Stockerblog.com.
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