CEF (Pty) Ltd will start trading carbon credits this year to encourage projects that cut greenhouse gas emissions.

Dr Manny Singh said yesterday that CEF’s trade in carbon credits would feed into the European Union emissions trading scheme, whose participants include the EU’s 27 member states.

The scheme allows EU countries or companies that fail to meet designated emission reduction targets to avoid paying penalties by purchasing carbon credits, which are issued on projects around the world that result in reductions in the emissions of greenhouse gases.

“We’ve been assessing this for the last six months and there is economic justification,” Singh said, indicating that a trading unit could be established by June or July.

CEF will appoint a carbon manager to oversee its involvement in carbon trading and will set up a registry account in Europe to facilitate its involvement.

Apart from trading in carbon credits, CEF hoped to set itself up as a one-stop shop for developers of carbon projects, providing services such as applying to have projects registered under the Clean Development Mechanism, the trading scheme of the UN’s Kyoto protocol, which is designed to cut emissions that contribute to climate change.

CEF opted to start trading carbon credits after its involvement in renewable energy projects showed that third parties were selling credits for higher prices than the project developers received.