Carbon-trading log ready by November

The ITL is part of the settlement system for carbon trading and will deliver traded carbon allowances from sellers to buyers. It will link into the existing EU Emissions Trading Scheme’s (ETS's) transaction log in November, connecting the EU market to the rest of the Kyoto accord countries.

“The ITL will create a controlled environment for worldwide carbon trading. It is at the heart of how certified emission reductions (CERs) will be brought into the ETS system from January 2008,” said Paul Newman, managing director at London-based energy broker ICAP Energy.

The ITL will allow industrialised, or 'Annex 1', nations under the Kyoto Protocol to trade assigned amount units (AAU), which are the Kyoto equivalent to Europe’s EU emission allowances. There are expected to be around 56 billion tonnes of AAU in the ITL system over the Kyoto Protocol’s five-year period from 2008 to 2012.

“With such quantities of emission allowances in the Kyoto system, recording their whereabouts at all times is crucial to the integrity of the Protocol,” said Yvo de Boer, executive secretary for the Bonn-based UN Framework Convention on Climate Change.

The ITL will become fully functional once national registries have established operational links with the ITL. All registries must pass an official set of tests to ensure they meet the necessary standards before they can operate. So far, eight registries have been approved to operate with the ITL. They are the registry of the Clean Development Mechanism and those of Austria, the Czech Republic, Hungary, Japan, New Zealand, Switzerland and the UK. A further seven European registries have passed the technical tests and are finalising their documentation. Registries are scheduled to have all completed their ITL approval processes by mid-October 2007.

“The functioning of the ITL would give an enormous boost in confidence to the carbon market, especially with companies that take a more careful approach to entering the market, as they might not have the mandate to trade if there is no robust delivery mechanism in place,” said Sara Stahl, head of business development and marketing in London at the Amsterdam-based European Climate Exchange.

The ITL could change the way that CERs are traded because it will provide spot prices for CERs. “At the moment you can only trade CERs on a forward basis. When the ITL is operational, a spot market will develop as well,” says Stahl.

Under the 1997 Kyoto Protocol, 36 industrialised countries are required to reduce greenhouse gas emissions by at least 5% below 1990 levels between 2008 and 2012. A total of 175 countries have now ratified the treaty, which entered into force in February 2005. As for the future of the ITL and the carbon-trading market, “this may even lead to a further phase after the Kyoto Protocol treaty ends in 2012,” says Newman.

See also: ABN Amro launches climate change index
Beijing to host first carbon credits exchange in developing world
Isda publishes emissions annexe
An environmental concern

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Chartis Energy50 2023

The latest iteration of Chartis' Energy50 2023 ranking and report considers the key issues in today’s energy space, and assesses the vendors operating within it

2021 brings big changes to the carbon market landscape

ZE PowerGroup Inc. explores how newly launched emissions trading systems, recently established task forces, upcoming initiatives and the new US President, Joe Biden, and his administration can further the drive towards tackling the climate crisis

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here