Carbon traders dip toe in post-2012 market

COPENHAGEN, March 13 Tue Mar 13, 2007 12:14pm EDT

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COPENHAGEN, March 13 (Reuters) - Morgan Stanley (MS.N) and RNK Capital have completed the first deal to trade European Union carbon emissions permits for delivery after 2012, hinting at growing confidence that carbon markets are here to stay.

The Kyoto Protocol on global warming has kick-started trade in carbon emissions permits by setting rich countries limits on their emissions of greenhouse gases, but allowing them to buy permits from poor countries to meet these goals.

Kyoto targets expire in 2012, but recent moves for example by the European Union to set a unilateral emissions target to 2020 is giving investors confidence that there will be long-term demand for permits.

The EU has set up its own carbon trading scheme to help the 27-nation bloc achieve its Kyoto targets, setting emissions limits on its heavy industry while allowing companies to trade EU allowances (EUAs).

The next phase of the EU scheme also ends in 2012.

"This trade is a clear indication of our confidence in the political will of European governments to continue to build on the success of the EU emissions trading scheme," said Morgan Stanley's Imtiaz Ahmad on Tuesday.

Evolution Markets brokered the deal, which traded 50,000 EUAs, equivalent to 50,000 tonnes of carbon dioxide emissions, at 20.05 euros ($26.43) each, for delivery in 2013.

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