Tag Archives: transaction
China Launches First Carbon Market In Shenzhen
http://www.ft.com/cms/s/0/ccf2987e-d808-11e2-9495-00144feab7de.html#ixzz2WeKodNcr By Kathrin Hille in Beijing China saw its first-ever domestic transaction in the right to discharge carbon dioxide at the launch of its first pilot carbon market on Tuesday, moving the world’s largest CO2 emitting country closer to capping such pollution. A power plant of Shenzhen Energy Group, a state-owned utility, sold an emission permit for 10,000 tonnes to the Guangdong arm of state oil group PetroChina for Rmb28 ($5) a tonne and another 10,000 tonnes to Hanergy, a privately owned power generator and solar-panel maker, for Rmb30 a tonne, according to the Shenzhen Carbon Exchange. “This means that our country has taken a key step in establishing a carbon market,” the exchange said in a statement. Carbon markets allow companies to buy permits to emit carbon dioxide from those that burn less fossil fuels. They thus help set a price on emissions, a mechanism that aims to encourage companies to reduce such pollution and invest in cleaner technologies. The trading scheme, launched in a grand ceremony in the presence of local and national policy makers, is the first among seven regional trading platforms to start operating this year or next to help the government decide in 2015 whether to set up a nationwide carbon market. “This is further proof that China recognises the need to address climate change,” said Dan Dudek, head of the China programme of the US non-profit group Environmental Defense Fund. However, some experts say the scheme is little more than a drop in the ocean considering China’s massive total emissions and the country’s pressure to keep its economy growing fast enough to continue lifting people out of poverty. The Shenzhen pilot involves 635 local companies which account for 26 per cent of the city’s gross domestic product and 38 per cent of its CO2 emissions, or about 30m tonnes – a tiny amount compared with the 8bn tonnes China emitted in 2012. The enterprises that participate in the Shenzhen scheme, which have been allotted permits for total emissions of 100m tonnes between 2013 and 2015, are set to reduce their carbon intensity by close to 7 per cent over the next two years, the exchange said. But the pilot market starts at a difficult time for global carbon markets including the world’s largest, the EU’s Emissions Trading System, which is struggling with record price falls as the sluggish economy exacerbates an oversupply of emissions permits. The prices of the first permits sold on the Shenzhen market were about 25 per cent lower than benchmark prices in the EU Emissions Trading System, where permits were trading for €4.65 a tonne at midday on Tuesday. That is nearly 90 per cent higher than in April, when prices collapsed after the European Parliament voted down a bid to tighten the flailing market, but well down from July 2008 when benchmark prices were nearly €30 a tonne. Chinese observers said the government was likely to move cautiously to avoid any adverse impact as China’s economy is slowing as well. “Progress will depend on the government’s determination,” said Lin Boqiang, an energy economist at Xiamen University. “The question is what impact it will have on the market – unlike other commodities, for example when you buy oil you get oil, here you spend money and the only thing you get is a contribution to the global climate.” Experts say what the Shenzhen scheme and the other regional pilots that are expected to follow can achieve is also limited by the lack of a nationwide legal framework. “Unless the government sets up a binding framework, it will be very difficult to determine fair transactions, and trading will be hampered,” said Mr Lin. Additional reporting by Li Wan Continue reading
Warning EU Tax Will Hurt Savers And Investors
Monday 15 April 2013 The Financial Transaction Tax (FTT) will damage savers and investors across Europe, and will drive away the firms from whom it expects to raise billions of euros in taxation, it has been claimed. The Association of the Luxembourg Fund Industry (Alfi) was in Edinburgh highlighting its campaign against the controversial tax, which is set to be approved by only 11 EU member states but enforced in all 27. The FTT is one of three current EU financial sector initiatives being fiercely fought in the UK. The fund management industry faces a cap on bonuses to bring it into line with investment banking, while tighter solvency rules are said to pose a serious threat to pension funds. Anouk Agnes, a director of Alfi, said it strongly opposed the FTT. “We think it will be catastrophic for the investment fund industry, in Luxembourg but also in Europe generally. First of all we believe investment funds should not be in the scope of the FTT because they were not the origin of the financial crisis. “Second we believe it will not be the financial actors who pay the tax burden but the end investors, because obviously the costs will be added to the investments. “Finally we see the tax amounts that should be collected as an illusion, because we are afraid firms will find ways round the tax and even possibly relocate entirely outside Europe, which is in nobody’s interest. So it is difficult to understand who the FTT will ultimately benefit.” However Ms Agnes admitted that, politically, if 11 countries wanted to push FTT through they would. Alfi has said the tax “ultimately will have an extremely negative impact on all long-term savings of European Union nationals, including pension funds” and a “devastating effect on the long-term financing of the European economy”. Luxembourg is Europe’s biggest fund centre, with offerings that sold in 70 countries round the world. Firms using its “passported” UCITS funds include Aberdeen Asset Management, in 27 countries, and RBS in 23, and the funds support part of the back office operations in Edinburgh, of firms such as JP Morgan, Citigroup, State Street and RBS. Denise Voss of Franklin Templeton, vice-chairman of Alfi, said the FTT was supposedly intended to deter speculative activity, but would hit hardest at money-market funds, which could disappear because they were the funds trading the most frequently. “These costs will have to be picked up by somebody,” she said. “We believe the insecurity will make important actors leave and relocate.” The tax will apply to redemptions from funds, though not subscriptions, and on all buying and selling within funds. Ms Voss admitted this would have the least effect on equity funds with low turnover, and also that managers running broad funds for investors inside and outside Europe would probably not relocate. On the proposal to cap fund manager bonuses, Ms Agnes said: “The remuneration issue was related to banks and more specifically to investment banks and suddenly even UCITS are affected, which are already regulated and very transparent. The remuneration rules do not make much sense and are just an additional burden.” The current EU proposals would outlaw fund management bonuses that exceed fixed annual salaries, and extend the timeframe for some deferred payouts from three to five years. Daniel Godfrey, chief executive of the Investment Management Association, has said it will “have the opposite effect of what they are seeking to achieve”, raising costs for consumers and weakening the link between performance and rewards. Meanwhile, the National Association of Pension Funds warned new EU proposals to impose insurance company solvency rules on pension funds could increase UK scheme deficits to at least £450bn. Joanne Segars, NAPF chief executive, said: “This project has been conducted at breakneck speed due to the commission’s ludicrously tight timetable. This cannot be the basis for formulating a policy that could undermine the retirement plans of millions. “The European Commission needs to rethink its proposals… it would be better to focus on the 60 million EU citizens who have no workplace pension, instead of eroding the good pensions already in place.” Continue reading
