US carbon trade lifts Climate Exchange results

London, 20 September: A booming US trade in voluntary carbon credits pushed Climate Exchange into profitability in the first six months of this year, the company reported on Wednesday.

The London-listed business, which owns the Chicago Climate Exchange (CCX) and the European Climate Exchange (ECX), made a pro-forma operating profit of £726,000 ($1.4 million) in the six months to 30 June, compared with a £1.9 million loss in the same period last year.

Chief executive Neil Eckert said: “Both contract volumes and membership on ECX and CCX have increased considerably… Demand across the globe for exchange-traded environmental products continues to grow at a rapid rate and we look forward to growing with that demand.”

ECX is Europe’s leading exchange for trading EU allowance futures. Volumes in the first eight months of the year reached 654,819 contracts, up from 256,852 in the same period last year, while revenues rose to £1.5 million from £0.9 million in the half-year.

However, growth on CCX made a bigger impact on the results. The exchange operates as a voluntary, but legally binding, cap-and-trade scheme for mainly US-based businesses. As in Europe, volumes on CCX have more than doubled since last year, to 11.8 million tonnes of carbon dioxide in the first six months of 2007.

But CCX revenues soared to £4.2 million from £1.8 million, and the exchange made an operating profit of £1.1 million – unlike ECX which lost £370,000.

“We get €4 ($5.6) for every 1,000 tonnes traded on ECX, but $10 for every 100 tonnes traded on CCX,” Eckert said. CCX also captures revenue from offset registration fees and other administrative fees, whereas ECX only charges for trading and membership and operates in a much more competitive environment, he explained.

The company also runs the Chicago Climate Futures Exchange (CCFE), which takes the lion’s share of exchange trading in US sulphur dioxide permit futures. The CCFE has launched this year futures contracts for an eco-stock index, CCX credits, UN-issued certified emission reductions and it recently announced plans for futures trading in catastrophe events.

Climate Exchange was listed on London’s Alternative Investment Market four years ago, with shares priced at £1.02 each. Today, its shares traded at £15.62.

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