New carbon trading ratings service launched

26/06/2008

A service designed to rate the effectiveness of carbon credit trading schemes was launched yesterday at the London Stock Exchange.

The Carbon Ratings Agency, launched by the IDEAcarbon, will assess a number of ‘assets’ for schemes in the Clean Development Mechanism (CDM), Joint Implementation and voluntary markets, rating them on a scale from AAA to D on how likely they are to meet their stated goals.

Features of the scheme which will be assessed will include the scheme’s concept, framework, implementation, context and participants, rating each one on how high-risk the scheme is.

The Agency has already produced ratings for 25 CDM projects across a range of areas and technologies, and is looking to add eight to 10 new projects each month.

Lord Stern, vice chairman of IDEAglobal said the markets are set to take off. “The carbon markets are showing their potential to reduce global emissions and should form a key plank for any future global climate agreement,” he said.

“If we are to attract the levels of finance necessary to make this a mainstream market and have a strong impact on emissions reduction, risks must be clearly understood, articulated and managed. A detailed ratings system is a vital tool to bring greater clarity, transparency and certainty to the market.”