RBC unveils worldwide carbon trading capabilities to help industry manage greenhouse gas emissions
TORONTO, NEW YORK and LONDON, July 2008 — RBC Capital Markets today announced its global capabilities for greenhouse gas (GHG) emission trading:
* RBC Capital Markets is a General Clearing member and market maker on exchanges around the world, trading on such exchanges as the European Climate Exchange (ECX), the Montreal Climate Exchange (MCeX), the Chicago Climate Exchange (CCX), the NYMEX Green Exchange and soon under the Regional Greenhouse Gas Initiative in the Northeastern United States. The firm’s new emissions trading group also provides access to over-the-counter (OTC) markets by acting as counterparty, and accommodates spot and forwards, as well as various OTC structures.
* RBC Capital Markets is a significant player in the Canadian GHG emissions trading market, with the infrastructure to be able to grow quickly as U.S. and global demand increases. In addition, RBC’s Futures and Base Metals Group of Global Prime Services provides execution, clearing and custody of EU Allowances (EUAs) and Certified Emission Reductions (CERs) certificates for markets in North America and Europe.
“Our clients are looking for a firm that can offer an international solution for our clients to a global problem,” said Mike MacBain, head of Global Debt Markets, RBC Capital Markets. “We are a market making provider, taking principal risk, providing pricing liquidity and facilitating hedging for clients. We’re building a global book for these markets and becoming a one-stop shop for our clients’ GHG emissions trading needs.”
RBC Capital Markets’ emissions trading group, under the leadership of industry veterans Frank Riley and Kevin Paley, operates trading desks in Toronto and London and executes trades on markets in the U.S, Canada and Europe.
How GHG Emissions Trading Works
GHG emissions trading is a system that restricts the total allowable emissions of greenhouse gases, while giving capped emitters the flexibility to meet their emission targets in the most economic way. The Kyoto Protocol, which was developed to reduce greenhouse gases worldwide by setting emission reduction targets for developed countries, provides the backdrop against which domestic trading programs have been developed.
In a regulated GHG emissions market, governments set annual targets, or caps, for greenhouse gas emissions from industry in their regions or countries. Capped entities are issued allowances equal to their capped amount. If a capped emitter produces less than the permits allocated to it, the surplus is a carbon credit that can be sold to another emitter or on the open market, or retained for future use. Non-capped emitters may also participate in GHG markets by making voluntary, permanent emission reductions that are legally recognized by a regulator. Those Emission Reduction Credits or Offsets can also be traded in the open market. One carbon credit is equal to one tonne of carbon dioxide reduction.
RBC’s Commitment to the Environment
Offering RBC Capital Markets’ clients a means by which they may manage their GHG output is an extension of RBC’s longstanding commitment to the environment. RBC has been named one of the world’s top 100 sustainable companies for four consecutive years, according to the “Global 100” ranking compiled by Innovest Strategic Advisors. Since 2003, RBC has been a respondent to the Carbon Disclosure Project (CDP) and has been named a Climate Disclosure Leader by the CDP and the Conference Board of Canada.
RBC’s environmental policy outlines its commitment to offer innovative, practical and cost-effective financial products and services to promote environmentally sustainable choices, as well as the enterprise’s own initiatives to manage its environmental footprint.
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