The European Energy Exchange (EEX) in Germany has started publishing a reference price for the trade in CO2 certificates throughout Europe on each trading day. The move comes in preparation for the European Union emissions trading scheme (ETS), which will start on January 1, 2005.Several large European trading participants have already agreed to participate in the project by reporting the transactions they execute. The Leipzig-based EEX will calculate the volume-weighted average on the basis of these reports and publish it as the CO2 index. The price will appear on the exchange's website after the end of trading at around 4pm CET.
The companies already involved are four German firms – Elektrizitäts-Gesellschaft Laufenburg, Eon Sales & Trading, Essent Energy Trading and RWE Trading – and Vattenfall Europe Trading, the Hamburg-based division of Swedish power producer Vattenfall.
Several other companies have indicated they wish to follow suit, said the exchange. The procedure is open for all companies participating in trading in CO2 certificates.
EEX has implemented the most advanced emissions pricing initiative, said Stefan Judisch, managing director of RWE Trading in Essen, while several other European exchanges are working on developing appropriate products.
“With the first ETS compliance period looming, the industry has recognised the need to establish an objective and transparent mechanism for pricing and trading emissions allowances as quickly as possible,” said Judisch.
EEX chairman Hans-Bernd Menzel said: “We see the index as a logical preparation of the trade in CO2 certificates, which will commence at the beginning of 2005 and which we will operate over the same platform as the spot market for energy."
The exchange had already said it would start spot CO2 trading on its Xetra system in January.
Meanwhile, as of November 2004, the EEX will also offer power options contracts in addition to spot power and power futures.
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