Sindicatum May Buy Projects as Emission-Credit Prices Plunge

By Mathew Carr

Feb. 23 (Bloomberg) -- Sindicatum Carbon Capital Ltd., the developer that raised $280 million for carbon-reducing projects, is considering acquisitions as the “discomforting” plunge in the price of emission permits puts pressure on rivals to sell.

“Existing projects may sometimes be cheaper than starting a new one,” said Richard Edwards, head trader at London-based Sindicatum, in an interview. “The fall in prices, while temporarily discomforting, doesn’t put us off.”

UN certified emission-reduction credits, or CERs, for delivery this year have dropped 63 percent from their peak in July on speculation that the recession will reduce demand.

Sindicatum, which employs more than 100 engineers, technicians and climate-change specialists, helps miners use methane from coal, and factories combust industrial gases that would otherwise trap heat in the atmosphere. The company is part-owned by Citigroup Inc., American International Group Inc. and a unit of Cargill Inc.

Edwards compared the drop in carbon-credit prices to a decline for oil stocks on the New York Stock Exchange, which makes takeovers more attractive than exploration. “The best place to drill for oil is sometimes the floor of the NYSE,” Edwards said. He wouldn’t name potential targets for Syndicatum.

EcoSecurities Group Plc, developer of the biggest number of emission-reduction projects, fell to a record low 19.50 pence on Feb. 11 in London trading. It was unchanged today at 20 pence, valuing the firm at 23.3 million pounds ($34 million). Trading Emissions Plc hit a record low 62 pence on Feb. 17 and fell 0.3 percent today to 72.25 pence, valuing it at 195 million pounds.

‘Oversold’

Certified emission-reduction credits on the BlueNext spot exchange in Paris dropped 4.8 percent today to 8.85 euros a metric ton. They were at a record low 7.75 euros as of Feb. 12. The CERs are created under rules of the United Nations-managed 1997 Kyoto Protocol.

A price surge last week from near record lows was a bounce because the market was “oversold,” Edwards said. A recovery of Europe’s economy would likely boost emission prices by 2011 or 2012, he said.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net