Blow to Carbon Market Image as Climate Negotiations Heat up

LONDON, December 2, 2010 - The image of the carbon market has suffered a triple blow this week just
as climate change negotiations have started to heat up in Cancun, Mexico.

Emissions allowances worth EUR24m have been stolen from a Swiss cement
company, while an Italian trading platform has frozen all deal activity due
to suspicions of carbon tax fraud. Meanwhile the United Nations is currently
investigating whether it is handing out too many carbon credits to projects
cutting industrial pollution.

"The fraud, theft and controversy over carbon offsets come at the worst
possible time for politicians trying to get a new climate change deal in
Mexico right now," Isabel Save, carbon editor at information agency ICIS
Heren, said. "A new climate change deal will cost money. The goal will be to
make sure the private sector pays, not the taxpayer."

The carbon market is currently the main way of making companies invest in
climate change action. But unless the EU, the UN and national governments
clean up the market's image, carbon trading as a way of tackling climate
change will be a tough sell in Cancun.

"It would be a shame if preventable scandals ruined the chances of
getting a global carbon market. The market is already providing a price tag
for carbon emissions and an incentive for companies to take the low-carbon
route to development. But investment might dry up if new carbon market
mechanisms are not ready to take over once the Kyoto Protocol runs out,"
Isabel Save said.

ICIS Heren data shows that the price of EU emissions allowances (EUAs)
has been stable around EUR12-16/tonne this year. UN-backed carbon credits
(CERs) have traded mainly between EUR11-14/tonne.

The UN-led summit in Cancun, Mexico, will end next Friday. Politicians
are not expecting to reach a legally binding treaty, like the Kyoto Protocol,
until next year at the earliest, but will need to make progress on climate
action finance.

ICIS Heren is an information service provider for gas, liquefied natural
gas, power, carbon and coal market intelligence. We publish a suite of
tailored reports providing news, analysis, benchmark price assessments and
indices. Through our reports we aim to bring liquidity and transparency to
power and gas hubs, helping you analyse the sector and make informed business
decisions.

For more information visit www.icis.com/heren

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    Isabel Save
    Editor - European Daily Carbon Markets
    ICIS Heren
    t: +44-20-7911-1942
    e: isabel.save@icisheren.com

    www.icis.com/heren

Isabel Save, Editor - European Daily Carbon Markets, ICIS Heren, t: +44-20-7911-1942, e: isabel.save at icisheren.com