Calyon's weather and emissions desk has received bank approval to start trading emissions allowances and David Foster, head of weather and emissions in London, expects it to execute its first trades in a month. Foster said the bank will trade E.U. emissions allowances with power companies, as well as the glass, steel and cement producers covered by the scheme. "Since the start of the year, the phones have been ringing off the hook with people asking about emissions trading," he said.
Allowances have been traded in limited quantities on a forward basis for some time, but the spot market has not yet taken off because several E.U. countries including the U.K. and Italy have delayed announcing their allocation of allowances. This has put some players off the emissions market and is an obstacle to the development of derivative instruments such as options (DW, 1/14). However, Benedikt von Butler, broker at Evolution Markets in London, expects the spot market to be up and running within the next one to two months.