First internet carbon credit auction "exceeds expectations"

The world's first internet-based auction of UN-approved carbon credits was successfully completed yesterday with four anonymous buyers agreeing to acquire 255,592 certified emission reductions (CERs) at a price of €19.05 (£14.93) per tonne.

Under the terms of the auction, the parties entered into a binding contract as soon as the auction closed and the CERs, which come from two biomass projects in Chile operated by forestry company Arauco, will be delivered within a few days.

James Emanuel, commercial director at CantorCO2e, the company operating the auction service, said that the auction had exceeded expectations.

"The big selling point was always that there is a binding contract at the fall of a hammer," he said. "The whole thing was very quick and efficient – within seconds of the auction closing people had the result. The price was great, completely in line with the market, and we could have sold the credits we had four or five times over."

CantorCO2e claims that the new model for buying and selling CERs will help tackle "gazumping" in the market, whereby changes in the price of CERs that occur between the time a deal is agreed and contracts are finalised give buyers or sellers an incentive to renege on agreements.

Steve Drummond, co-CEO at the firm, added that the new service would also help increase liquidity in the market, while the policy of notifying buyers precisely where CERs have been issued will allow them to avoid "contentious sources" of CERs that they may be opposed to.

The company is now hoping to undertake its next auction within the next month or two, although Emanuel admitted that delays remained a possibility. "There are a number of well-documented bottlenecks in the UN approval and CER issuing process for projects and many of our sellers are in India where it is currently festival season," he explained. "We would like to think that we can hold another auction within the next month or two but it is subject to a number of variables."