The Hindu Business Line : Navin Fluorine, Guj Fluorochem fall as carbon credit price slumps

Stocks that had been fetching additional premium for their attempts at carbon trading declined this week as European rates for carbon units suddenly dipped after rumours suggested markedly reduced emission levels achieved by German companies.

Navin Fluorine shed over 9 per cent this week to close at Rs 349.15 on Friday. Gujarat Fluorochemicals also lost around 9 per cent at Rs 588.50, while SRF finished the week with a value dip of more than 2 per cent at Rs 323.20.

Experts in large Indian corporate houses told Business Line that unconfirmed reports that German EU European Trading System (ETS) installations emitted 14 million tonnes less than their allocations (a kind of surplus) in 2005 led to the carbon price crash. This was, however, rubbished by the German Emissions Trading Authority today.

The European Federation of Energy Traders has blamed the entire thing on "uncoordinated release of market sensitive emission data".

It is learnt that the rate today clawed back in early trading to 14.2, after touching a low of 11 this week. The highest in recent times has been 29.

As per the EU Allowances, the tradeable unit under the EU ETS equals 1 tonne of Co2.

Some experts are of the view that a price of 13 or 14 (for 1 tonne of Co2) was quite realistic in the case of an Indian company, considering that a high of 28 was actually an intra-Europe rate. It is pointed out that each Annex-1 country, under the Kyoto Agreement, is obliged to reach a domestic target for Co2 equivalent emissions by an average of 5.2 per cent below the 1990 level, by the first commitment period of 2008 to 2012.

In the context of the sudden price crash, it is quite possible, say some experts, that the emission reduction targets may well be shrinking even before the obligatory period, thereby putting pressure on traded carbon prices.