London, 4 September 2011: Thomson Reuters Point Carbon

Trading volumes in secondary CERs jumped in August while ERU dealing surged by over twenty-fold after huge increases in the supply of the two types of U.N.-backed credits, data compiled by Point Carbon News showed. A record 176.8 million CERs were traded across Europe’s main six emissions exchanges last month, 82 percent above the amount traded in July, as the U.N. doled out 37.7 million units, the second highest monthly distribution ever.

ICE Futures Europe handled 93.4 percent of the total CER volume on the six platforms, while GreenX transacted 4.5 percent and Paris-based spot bourse BlueNext saw 1.7 percent pass through its system.

At 60 percent, most CERs were traded through over-the-counter (OTC) futures contracts, while 68 million or 38.5 percent were done over screen-traded futures, the highest share since last December.

Just 2.9 million units were traded via spot contracts, representing a 1.6-percent share of the secondary CER market, which the World Bank said was worth $18.3 billion last year.

Despite the rise in futures volume, monthly trade in CER options fell by half to 1.5 million units, two-thirds of which was done in GreenX’s contracts.

Meanwhile, secondary ERU trading, which grew to 11.9 million units from just 525,000 in July, was dominated by ICE.

All 11.9 million credits, which are issued under the Kyoto Protocol’s Joint Implementation (JI) scheme, were traded via ICE’s OTC futures contract, the data showed.

The surge in volume reflects the swelling supply in the relatively opaque ERU market.

Russia has stepped up ERU issuances in the past month, distributing 16.8 million units to nine JI projects since the end of July.

This bring the total awarded by Russia in the past year to 21.9 million, which is around a quarter of the almost 90 million ERUs handed out to date.

No ERU options were traded last month, the data showed.

EUA VOLUME

Overall exchange-traded carbon volumes climbed by around 19 percent to 793.7 million units last month, with EUAs accounting for 605 million of this figure, a 6.8 percent increase from July.

Just under 92 percent of all EUAs were traded on ICE, the U.S.-headquartered exchange’s highest monthly market share since May 2010.

GreenX ranked second with a 5.2 percent share of EUA volumes, while German bourse EEX and BlueNext ranked third and fourth with a 1.2 and 1.0 percent share respectively.

Nasdaq OMX handled 4.4 million EUAs, worth a 0.7 percent share, while London-based LCH.Clearnet had its worst month ever in emissions trading, handling just 625,000 EUA futures and 60,000 CER futures.

Front-year EUA prices bottomed at a two-and-a-half-year low of 10.25 euros in early August before rallying by around 30 percent through the last three weeks of the summer month, which has historically been known for low trading volumes.

A record 72.4 percent of all EUAs were done over screen-traded futures, while 26.2 percent were traded via OTC futures contracts.

Spot EUA trading, which has suffered since thieves stole over 3 million permits from several online CO2 registry accounts between November 2010 and January 2011, rose for a third month to 8.3 million, the most traded since March and worth a 1.4-percent share of August’s EUA volume.

Options contracts worth 67.3 million EUAs were transacted last month, representing a 6.5 percent fall from July’s figures.

Ends --

By Michael Szabo – Point Carbon - for Commodities Now.

www.pointcarbon.com