Carbon Prices Hit Highs as the EU Moves to Ban Controversial Credits

LONDON, August 26, 2010 - CER prices soared to hit a four-month high on Thursday on news that
European companies could be banned from using carbon credits from
controversial offset projects, according to ICIS Heren data.

"If the EU bans all industrial carbon credits, the supply of credits
would drop by around 75%," Isabel Save, carbon editor at ICIS Heren, said.

Late on Wednesday, the EU issued a statement saying it had taken a first
step to restrict the use of carbon credits from large-scale industrial
projects.

These mammoth offsets schemes have come under fire from green groups,
which say they actually raise emissions instead of cutting them. The reason
is that they can make money from inflating their output and selling carbon
credits, even when demand for their products is falling.

ICIS Heren data shows prices in the over-the-counter market rising to
EUR13.55 per tonne of CO2 on Thursday for UN-backed carbon credits. European
companies active in the carbon market - mainly power generators and banks -
are covering an expected shortfall, having sold credit forward.

The UN has already launched a probe into carbon projects destroying the
greenhouse gas hydrofluorocarbon (HFC-23), due to suspicions these projects
have gamed the system and operated purely to get carbon cash.

The EU restrictions would come into place at any point after 2013.
Project lead times mean that investors need to know at least three years in
advance what type of credit will be allowed in the EU emissions trading
system, before committing any money.

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Note to editors :

The EU has so far allowed European companies to offset part of their
emissions in developing countries, by buying so-called certified emission
reductions (CERs) from UN-led projects to cut emissions. The UN issues one
CER for each tonne of CO2 avoided compared with a business-as-usual emissions
scenario.

European companies can offset on average 13% of their emissions through
CERs.

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.

For more information visit www.icis.com/heren

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    Contact details:

    Isabel Save
    Editor European Daily Carbon Markets
    ICIS HEREN
    Tel: +44(0)20-7911-1942
    E-mail: isabel.save@icisheren.com

Contact details: Isabel Save, Editor European Daily Carbon Markets, ICIS HEREN, Tel: +44(0)20-7911-1942, E-mail: isabel.save at icisheren.com