Carbon traders worried by lack of deal

Carbon emissions trading is an emerging new business in international markets, where traders buy emissions permits from developing countries and sell them on to developed countries. Last year, however, the global financial crisis hit mature economies hard, leaving them with less purchasing power to devote to cap-and-trade schemes. In addition, traders are concerned that failure to reach a deal in Copenhagen could adversely affect their nascent business.

In a high-end office building in Beijing's Central Business District, the South Pole Carbon Asset Management Company does not look much different from any other company. Some 10 young graduates from top universities send their days working on carbon emissions trading. The company was registered in Switzerland in 2007, and opened a Beijing office in 2007. As a major player in the emerging field of carbon trading with registered capital assets of several hundred million euros, the company buys carbon emissions permits in China, and sells them to governments or companies in developed countries.

Lin Yi, Manager of South Pole Carbon Asset Management, said, "Our current scale is above mid-level in this field. By 2012, our signing deals are expected to reach 30 to 35 million tons of carbon emissions."

Several years ago, international dealers could buy carbon emissions for 7 to 8 euros per ton in developing countries, and sell them for 40 to 50 euros per ton to developed countries. The huge mark-ups attracted over 100 traders to the business.

However, the global financial crisis slashed the purchasing power of many developed countries. In addition, the uncertain outcome of the UN climate talks in Copenhagen has driven carbon emission prices down on the international market. In Europe, prices have fallen from 20 euros per ton to 7.5 euros per ton. Over half of all global dealers are closing their businesses.

For those who are left, the results of the climate conference will be crucial. The compulsory emissions reduction requirement set by the Kyoto Protocal will expire in 2012, and if no new deal is reached, the whole carbon emissions market will suffer.