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First trade with carbon quotas

February 12, 2005, 09:00 CET

Statoil became the first company to trade carbon dioxide emission quotas – known as EU allowances (EUAs) – when Europe’s first market for such deals opened on 11 February.

The trading floor is organised by Nord Pool, the Oslo-based Nordic power exchange which Statoil recently agreed to use for its emission trading activities.

These have got going just before the Kyoto protocol officially comes into force on 16 February and launches cross-national carbon trading as a key tool for reducing greenhouse gas emissions.

In its initial trade, Statoil sold 5,000 tonnes of carbon dioxide to EDF Trading, an arm of Electricité de France, for EUR 7.15 per tonne.

“Although we’re a seller this time, I would emphasise that we’ll be a net buyer in the early phase of the system from 2005-07,” says Mats Fredriksson, head of emission trading at Statoil.

“That’s because we’ve already done a lot to reduce carbon emissions at our plants. More cuts will be very expensive, so we’ll be buying from players who can achieve far bigger reductions per krone than us.

“This demonstrates that emission trading is an instrument which benefits the environment. It’s important for us to get involved early to gain experience with how this market functions.”

EUAs traded by Statoil will primarily cover its obligations as the operator of plants subject to carbon quotas under Norwegian and European climate legislation.

They involve the Kalundborg and Mongstad refineries in Denmark and Norway respectively, and the methanol plant at Tjeldbergodden in mid-Norway.

From mid-March, these facilities will be awarded 95 per cent of their average emissions for 1998-01 free of charge.

Remaining volumes will be covered by cutting the amount of carbon dioxide released by the plants themselves, or by purchasing EUAs in the market.

Buying and selling EUAs forms part of Statoil’s oil trading and supply cluster. This has long experience of such activity through the sale and marketing of crude oil, refined products, liquefied petroleum gases and electricity.

In addition to trading on Nord Pool, Statoil will also conclude direct deals with European players who are net sellers of EUAs.