August 12, 2010 / 11:50 AM / in 9 years

Voluntary CO2 offset market participants shrink

* EcoSecurities’ head of voluntary markets leaves firm

* Some new sectors show cautious interest in market

By Nina Chestney

LONDON, Aug 12 (Reuters) - Some major participants in the voluntary carbon market are shrinking after the United States failed to implement federal cap-and-trade legislation and the market stopped growing last year.

Intercontinental Exchange Inc. (ICE.N) has laid off staff at newly acquired Chicago Climate Exchange (CCX), industry sources said this week; [ID:nLDE6791WI] the head of MF Global’s voluntary markets desk departed in June [ID:nLDE65E0YT]; and EcoSecurities ECO.L closed its U.S. office earlier this year. [ID:nN03695646]

In the latest move, EcoSecurities’ global head of voluntary and new carbon markets, Lisa Ashford, left the company earlier this week, the clean energy project developer told Reuters on Thursday.

Ashford will pursue new opportunities, but her departure will not affect the firm’s voluntary offset portfolio, a company spokesperson said. Ashford was not immediately available for comment.

The voluntary market operates outside regulated carbon emissions reduction schemes and relies on businesses and individuals to offset their greenhouse gas emissions voluntarily.

The market slowed in 2009 after six consecutive years of growth due to the economic downturn and uncertainty about future climate legislation. [ID:nLDE65F0R0] It fell by 47 percent in value to $387 million in 2009, said a report by EcoSystem Marketplace and Bloomberg New Energy Finance.

Countries such as Australia and the United States have delayed legislation for regional trading schemes, which were hoped to spur the future growth of the market.

INTEREST

In the United States, offset prices on the CCX have fallen to around 10 cents a tonne from over $7 in 2008, while Climate Reserve Tonnes have dropped to $3.50 a tonne from $7.

But some companies have not been put off by slow progress on a U.N. climate pact or in developing regional global markets.

Clean energy project developer Camco International CAMIN.L bought a portfolio of carbon offset projects from U.S. developer Greenhouse Gas Services, it said on Tuesday. [ID:nLDE67912I]

Some European trading houses are considering entering the market, particularly eyeing forestry projects, an industry source said, without disclosing names.

Companies in other industries such as aviation and oil are also interested while offsets are cheap. In addition, they see low activity in compliance market exchanges and uncertainty about U.N.-backed carbon offsets after the Kyoto Protocol expires in 2012.

“In some ways the market looks positive. We have completed a higher-than-average number of deals in July and August. But it’s when these new players actually start buying that it actually changes the market,” the source said.

Players said the market is split between cheap credits for large industrial projects, which trade as low as $0.50 to $1 a tonne, and so-called exotic credits trading between 7 and 8 euros a tonne.

For a factbox on voluntary carbon credits click on [ID:nGEE5AO1S5]

Editing by Jane Baird

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