Shell grabs first post-2008 greenhouse gas deal

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The Independent Online

Shell, the energy giant, has struck the first deal to trade a carbon dioxide allowance for the second phase of the European Union's emissions trading scheme.

Even the first phase of the system does not formally kick off until January next year and runs to the end of 2007. Shell executed a trade for the second period yesterday, which runs between 2008 and 2012. The price was €9 (£6) a tonne. Not disclosed was whether Shell was a buyer or seller, the size of the trade, or the name of the counter-party - described only as "a large European corporate".

The move was hailed by Shell as "an important milestone deal" ahead of the Kyoto Protocol to reduce greenhouse gas emissions, coming into effect in 2008. Emissions allocations have not been determined for the 2008-12 period.

Evolution Markets, a specialist US-owned broker, executed the trade. James Emanuel, a director at Evolution, said the deal was not a case of speculation. "They are hedging themselves ... it is the first step in providing certainty for industry for the second phase," Mr Emanuel, who is based in London, said.

Trading of allocations for the first phase - each unit is worth one tonne of carbon dioxide - has been running since April 2003, though the volumes involved are as yet fairly low - €1m worth of trades are struck a day. The total value of EU allocations for the first phase is €50bn.

Kyoto, which has been saved by the recent decision by Russia to sign the pact, aims to cut global greenhouse gas from 2008. The EU has decided to start its scheme early in 2005.