London, 24 September 2009 

At a time when the carbon market is experiencing a shortage in the supply of issued CERs, a problem caused primarily by capacity issues in the CDM registration and issuance process (a problem exacerbated recently by the suspension of SGS as an accredited verifier), CantorCO2e has supplied 333,067 CERs into the market. 

CantorCO2e Limited today auctioned 333,067 Certified Emission Reductions (CERs) from two biomass projects in Chile. The projects are owned by Arauco, the largest forestry company in Latin America. The CERs, which are presently held by Cantor as agent for the Seller, sold to two anonymous buyers at a settlement price of €12.02 EURO. The auction process provides for an extremely transparent transaction with no barriers to participation and is thus perfectly accessible for any buyer of carbon credits.

Demand for the CERs outstripped supply by a significant margin. Participants were notified of the result within seconds of the auction close.

The electronic internet-accessed auction platform is the first of its kind in the carbon market. The CantorCO2e auction platform uses a uniform pricing algorithm similar to that used by governments to sell bonds.

This mode of sale offers a number of benefits, including the avoidance of protracted contract negotiations; a binding contract at the auction close; payment and delivery of CERs within days of the auction close; no delivery risk; and, a level playing field to buyers and sellers of all sizes. Being internet-based, buyers may participate from anywhere in the world and today’s auction attracted interest from eight countries in Europe, from Japan and from the USA. The CERs will be delivered to successful buyers via the UK national emission registry.

James Emanuel, Commercial Director at CantorCO2e, said, “The ability to secure a binding transaction without the delays necessarily involved in negotiating sale and purchase agreements is a hugely attractive proposition for buyers and sellers in the carbon market. The auction service provides the requisite instantaneous certainty that buyers and sellers desire.”

Due to the success of the auction platform in the past, this is the second time that Arauco, the seller, has opted to use the CantorCO2e aution platform. Gianfranco Truffello, Chief Financial Officer of Arauco, the seller, said. “Arauco has sold CERs in the past through the open market but there is no question that the auction is a far more efficient route to market, saving Arauco a great deal of time and money by avoiding bilateral negotiations with buyers. We simply pre-deliver the CERs to Cantor Fitzgerald and sit back to wait for payment a few days later.”

The Auction platform will procure the sale of the CERs to any number of multiple buyers where the price achieved by doing so would be higher than selling all of the units to a single buyer. Arauco last sold CERs in a CantorCO2e auction held in October 2008 and  the price was optimised for the seller by dividing the units amongst four different buyers. It is simply not commercially viable for a seller to achieve the same price optimisation when selling on a bilateral negotiated basis through the market.

CantorCO2e is offering the auction service on the premise that current carbon exchanges are not necessarily the best source of CERs. These exchanges operate on the basis of delivering to buyers secondary CERs which are unspecified CERs and more often than not these will be CERs from the less desirable and contentious industrial gas projects. By contrast, buyers through the CantorCO2e auction will know the type of CERs that they are buying, the geographic origin of the CERs, and if it waives its anonymity, the identity of the company selling the units. Emanuel added, “such transparency is an enormous benefit to buyers that prefer not to buy on the basis of a lucky dip. Moreover, sellers of good quality desirable CERs are able to achieve a better price for their emission reductions. Everyone is a winner.”

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