Slovakia eyes AAU sales to Spain: Point Carbon

Reuters News
Posted: Dec 21, 2011 10:58 AM

LONDON (Thomson Reuters Point Carbon) - Slovakia aims to sell some of its surplus Kyoto emission rights to Spain as early as next month despite depressed carbon prices amid the global economic downturn, Slovakia's environment ministry said.

The government is in talks with Spain about the sales of an undisclosed number of Assigned Amount Units (AAUs), a spokeswoman with the Slovakian environment ministry told Point Carbon News in an email.

Katarina Klapokova refused to reveal the exact rate Slovakia is asking for its AAUs, but said prices are very low.

"Due to the crisis AAU prices today move between 2-4 euros according to unofficial information," she said.

AAUs have been seen changing hands around a 20 percent discount to U.N.-backed Certified Emission Reductions (CERs), which hit a historic low at 3.8 euros on December 14 and have been hovering around 5 euros since then.

AAUs fetching as little as 2 euros would mean prices are valued a fifth of what they were worth three years ago when the first intergovernmental emission permit deals emerged.

Klapakova said Slovakia is adamant it will sell all of its 27 million available AAUs despite the depressed prices.

According to Slovakian newswire TASR, Spain is interested in buying units worth 20 million euros which could mean a volume of 5-10 million AAUs based on the ministry's indicated price range.

Apart from Spain, the World Bank is also interested in buying 500,000 to 1 million Slovakian AAUs, although talks are less advanced, TASR reported last week.

The spokeswoman was reluctant to comment on volumes under negotiation, but confirmed that the government is in negotiations with more than one potential buyer.

According to government estimations, cited by Slovakian daily SME last week, Bratislava expects to raise 80 million AAUs next year from selling the entire supply which would mean an average price of 2.96 euros.

The AAU market has seen more than 60 million units changing hands this year, around the same volume as in 2010, according to data compiled by Point Carbon News.

Slovakia's transaction, if struck, will be the country's second after it sold 15 million units to U.S. company Interblue for 5.05 euros in 2008.

For Spain, the deal could be the eighth, after Madrid bought a total of more than 70 million from the Czech Republic, Estonia, Hungary, Latvia, Poland and Ukraine.

(Reporting by Marton Kruppa)