News Releases

LONDON – Barclays Capital, the investment banking division of Barclays Bank PLC, today announced a series of amendments to its Standard Certified Emissions Reduction Forward Agreement (SCERFA) in response to the launch of the European Climate Exchange (ECX)’s CER future contract.

The SCERFA was created by Barclays Capital in October 2006 in order to establish an industry standard set of trading terms and to promote the liquid and transparent secondary trading of Certified Emissions Reductions (CERs), carbon credits produced by emissions reduction projects in developing countries under the rules of the Kyoto Protocol.

The modifications announced today are a result of evolving market practise and are aimed at reducing the basis risk between trading OTC SCERFA and ECX CER future contracts. They include:

• More registries valid for delivery – rather than restricting CER delivery to and from the UK registry for both buyer and seller, the revised SCERFA will give the flexibility to make or receive delivery in any registry as long as both the UK and the other registry have both met the eligibility criteria. If the eligibility criteria have not been met then delivery will still take place in the UK.
• Carry over amount – in line with the ECX CER future contract, deliveries held back due to a delay in the International Transaction Log (ITL) will no longer be subject to a cost of carry adjustment to the price. Delivery will merely be delayed with the notional contract price remaining the same.
• Large Hydro CERs – in line with market practice, and until there is more clarity in relation to the use of large hydro CERs in the EU ETS, the SCERFA will exclude them, in addition to the existing exclusion of CERs from nuclear and forestry projects.

As with OTC and ECX EUA contracts, differences remain between the updated SCERFA and the CER future. These relate to delivery and settlement dates which, for the SCERFA, stay in line with OTC EUA contracts (i.e. 1^st December delivery). The intention is to continue to adapt the SCERFA to market standards, whilst retaining its status as an OTC contract.

Commenting on the changes, Louis Redshaw, Head of Environmental Markets at Barclays Capital, said:

“Our intention when we launched the SCERFA was to accelerate the standardisation of CER trading.  This has happened over the course of the last 18 months and there has been good two-way pricing during this time.  The launch of the ECX CER future contract is a sign that the CER market has come of age, and is a welcome boost to overall market transparency.

“As we enter Phase II of the EU Emissions Trading Scheme, developments like today’s will facilitate further derivitisation and innovation in the EU ETS, just as understanding of and participation in the global emissions markets continues to increase.”

Ends

For further information, please contact:

Will Bowen, Barclays Capital Communications
Tel: +44 20 7773 3250
will.bowen@barclayscapital.com

Notes to editors:

Emissions trading at Barclays Capital

Barclays Capital has been at the forefront of emissions trading since the inception of the EU’s Emissions Trading Scheme. Barclays Capital has played a key role in the drive toward industry standard documents and concluded the first ever trade using the industry standard documents published by the International Swaps and Derivatives Association (ISDA) in July 2004. In March 2005, it was the first bank to take delivery of physical CO2 allowances under a spot market trade and in May 2005 it executed the first financial emissions trade to use the new London Energy Brokers Association (LEBA) carbon index as a reference price. In March 2006, Barclays Capital also became the first bank to take delivery of CERs into a temporary holding account on the UN’s CER registry. Barclays Capital has been recognised as a key player in the emissions trading market through various industry awards, including:

- Named Emissions Trading House of the Year– The Banker Investment Banking Awards (October 2007)

- Voted #1 in European Emissions Trading – Risk  Energy & Commodity rankings (Feb 2006 and March 2007)

- Voted #1 in CER Trading – Risk Energy & Commodity rankings (March 2007)

- Named Best Trading Company – Point Carbon carbon market awards (March 2006 and March 2007)

- Named Best Trading Company, EU Emissions Trading Scheme – Environmental Finance (December 2006 and December 2007)

- Named Pioneers in Emission Dealing – Energy Risk (December 2005)

About Barclays Capital

Barclays Capital is the investment banking division of Barclays Bank PLC which has an AA long-term credit rating and a balance sheet of over £1.2 trillion. With a distinctive business model, Barclays Capital provides large corporate, government and institutional clients with solutions to their financing and risk management needs.  Barclays Capital has offices in 29 countries, employs over 16,200 people and has the global reach and distribution power to meet the needs of issuers and investors worldwide.

For further information about Barclays Capital, please visit our website www.barclayscapital.com.

Barclays Capital - the investment banking division of Barclays Bank PLC. Registered in England 1026167. Registered office 1 Churchill Place, London, E14 5HP. Authorised and regulated by the Financial Services Authority and a member of the London Stock Exchange.