Evolution Markets announces today it has facilitated the first brokered Emissions Reduction Unit (ERU) cleared futures trade.
Gas Natural bought 100,000 ERUs for December 2010 delivery from Credit Suisse. The trade was brokered in the over-the-counter (OTC) market and then cleared through the European Climate Exchange. The ERU trade was part of an ERU-for-certified emissions reduction (CER) swap.
ERUs are the emissions credits associated with the Kyoto Protocol’s Joint Implementation program. Under this flexible mechanism, developed countries are able to fund emissions reduction projects in other developed nations (typically Eastern European countries) and use the resulting credits, ERUs, for compliance. Covered entities in the European Union’s Emissions Trading Scheme may also use ERUs for compliance.
Non-cleared trades in ERUs have been conducted in the OTC market for some time. Today’s trade represents the first OTC trade in ERUs to be cleared through an exchange, which should lead to the participation of more counterparties and increased liquidity.
For more details on how to transact in the European carbon markets, please contact our London based brokers at: +44 (0)20 7264 4550.