EIB’s Carbon Disclosure May Learn From Oil, Standard Bank Says

January 1st, 20126:32 pm @


The European Investment Bank, which
may have started selling 2013 carbon allowances in a 1.8
billion-euro ($2.4-billion) program, may strive for more timely
market disclosure, said a trader at Standard Bank Plc.

“In the oil market, the U.S. government generally
announces up to a month in advance when they intend to lend
volume from the strategic reserve and exactly what volume will
be lent,” Geoff Sinclair, London-based head of carbon trading
at Standard Bank, said by e-mail on Dec. 21. “Even in emergency
situations they forewarn the market. That is an appropriate
level of transparency that institutions in the carbon market
could aspire to.”

The EIB received the permits from the European Commission,
the regulator of the world’s largest emissions market at the
beginning of December and has to sell them within 10 months.
Prices fell to a record 12 days later amid uncertainty about
whether the sales had started. EIB spokesmen including Nick Antonovics didn’t immediately reply to e-mails and calls.

Companies buying 2013 European Union carbon permits
directly from the EIB may have “privileged” information that
other traders don’t have, according to an emissions trading
lobby group. The lack of public information about the
commencement of the sales means that “if you are a recipient of
a large volume you are in a privileged position,” Simone Ruiz,
Brussels-based European policy director at the International
Emissions Trading Association, said Dec. 16.

Selling Privately

The EIB may have begun selling privately the first tranche
of 200 million EU permits for the third phase of the EU’s
emissions trading system, which begins in 2013, to fund
renewable energy and carbon capture projects as part of the EU’s
drive toward a low-carbon economy, according to Orbeo and
Bloomberg New Energy Finance.

The EIB, whose president is Philippe Maystadt, will receive
fees of as much as 45 million euros for its role in helping the
EU sell allowances and choose investments, according to a co-
operation agreement
with the commission. It will get 15 million
euros, or a fee of 5 euro cents a ton, for selling a total of
300 million tons of carbon and managing the proceeds, the
agreement shows.

The EIB’s over-the-counter transactions “will be
structured in a way to ensure best competition and limit any
information advantage to the amount executed with each market
counterpart,” the bank said in a statement on its website
updated Dec. 2.

Strategic Petroleum Reserve

On June 23, the U.S. Department of Energy said it and other
International Energy Agency participating nations would release
oil into the world market from the Strategic Petroleum Reserve
to offset disruption in the oil supply caused by unrest in the
Middle East. On June 30, the department said it had received
bids and on July 11 it said it had awarded contracts for 30.6
million barrels.

In the carbon market, the European Commission in Brussels
said on Dec. 2 it had delivered 300 million metric tons of so-
called NER300 phase-three allowances to the EIB, 200 million of
which need to be sold by Oct. 2. Sales would start “soon”
after the delivery, according to the bank, which has since
declined to confirm whether sales had started. On Dec. 21, the
EIB said it will publish on or around Jan. 11 its first monthly
report on sales of carbon allowances from the reserve.

EU Carbon Falls

EU carbon for 2013 dropped to a record 7.26 euros a metric
ton on Dec. 14 on the ICE Futures Europe exchange in London. The
contract fell 5 percent today to 8.47 euros at 4:57 p.m. on ICE.

The EIB should seek to disclose its interventions in the
carbon market almost as often as they occur, said Jan Pravda,
director of Dublin-based CO2 brokerage Carbon Warehouse and an
investor. “I don’t see a reason why they should use different
disclosure rules than the U.S. Federal Reserve,” he said Dec.
21 by e-mail.

Disclosure may be made “not necessarily every day, but
every time and very quickly, keeping in mind that the market
responds in minutes to news like this,” Pravda said. Should the
EIB sell or buy, it “inevitably begins filling the void because
there is currently no central bank” for the main global-warming
market, EU carbon allowances, he said.

To contact the reporter on this story:
Mathew Carr in London at

To contact the editor responsible for this story:
Stephen Voss at


Article source: http://www.bloomberg.com/news/2011-12-28/eib-s-carbon-disclosure-may-learn-from-oil-standard-bank-says.html