IDEAglobal, a research company advised by economist Nicholas Stern, has started selling software that predicts prices of United Nations carbon credits and may spur trading and investment in emissions reduction.
The Carbon Rating Agency, part of the company’s IDEAcarbon unit, said its CARBONrisk software helps bring financial risk management tools to the carbon market, according to an e-mailed statement today. The software predicts supply and future prices of credits by analyzing the likelihood that emissions reduction projects will be awarded with tradable credits.
“The carbon markets significantly lag the established financial markets in their ability to generate and deploy the funding deemed necessary to address the effects of climate change,” IDEAcarbon Chairman Ian Johnson said in the statement.
Tradable UN carbon credits are awarded under the UN’s Clean Development Mechanism to projects in developing nations that reduce the release of greenhouse gases into the atmosphere.
There has been a “general lack of liquidity,” IDEAcarbon said. The software will help to manage “delivery risk” of carbon credits to forecast a price and help attract investment into CDM projects, according to the statement.
UN emission credits for delivery in December lost 0.9 percent to 13.70 euros ($19.26) a metric ton on the European Climate Exchange in London. About 1 tons of December credits were traded yesterday on the exchange. That’s about 13 percent of trading in the equivalent European Union carbon permits.
