But some market participants and observers told Point Carbon they have yet to see many clean development mechanism (CDM) portfolios come up for grabs, let alone deals at bargain prices.

“I would expect there to be consolidation at the moment but there just aren’t the transactions that are  being done,” said Simon Shaw, of EEA Fund Management, advisor to UK-listed CDM developerTrading Emissions plc.

“We are in a false world to some extent. People were thinking about it a couple of months ago, but perhaps because there has been a rally in the carbon price, we haven’t seen much come to light,” he added.

Share prices of listed developers and aggregators crashed since the price of secondary CERs fell from a peak of €22.90 in July last year to as low as €7.60 in early February.

The price of Trading Emissions shares fell 50 per cent while shares in Camco and Ecosecurities  collapsed by more than 80 per cent. But their value has since shown signs of recovery as CER prices climbed towards today’s levels of €10.75.

Despite the recent price upturn, Dutch bank Fortis Netherlands was reported to be interested in acquiring  stakes in project developers or taking on their portfolios because such assets were available cheaply.

But other sources said few such opportunities were available.

There are more companies in the market looking to buy portfolios of certified emission reduction (CER) credits than firms keen to sell the assets, according to Markus Huewener, CEO of German-based project developer, investor and carbon credit aggregator First Climate.

“We haven’t really seen very many of what you might call ‘distressed’ portfolios coming onto the market.  Our shareholders have been keen for us to look at opportunities but the prices have not been attractive.”

Huewener still reckoned that restricted access to cash caused by a lack of available credit lines could force some pure aggregators to sell their portfolios.

Consolidation should be expected among project developers and investors, as happens in any
maturing market, according to Richard Gledhill, global leader of carbon market services at consultancy PricewaterhouseCoopers.

“Now, because of the credit crunch, there is additional pressure on those with weaker balance sheets so it is reasonable to expect there will be further consolidation,” he said.

In its annual results last month, Trading Emissions plc said it had taken full control of developer and fund manager Carbon Capital Markets (CCM), in which it previous had a smaller share. CCM will continue to operate under its own name but has scaled back investments and reduced staff levels.


Source: PointCarbon News, Carbon Market Europe, p. 4-5