ASIC licence essential for trading carbon credits

In a step forward for Australia’s emerging carbon trading market, national electricity retailer ERM Power has been granted one of the first licences to trade in emissions units and derivatives.

The authorisation from Australian Securities and Investments Commission (ASIC), effective 3 October, clears the way for ERM Power to trade regulated emissions units on behalf of ERM Power and its customers and to provide advice to customers in dealing with regulated emissions units.

ERM Power’s General Manager Trading, David Guiver, said the company would be looking to provide emissions services to its existing business energy customers and engage with other entities seeking to enter the market.

“The licence gives us another string in our bow by allowing us to offer additional advice and services in the emissions space,” Guiver said.

“It increases our ability to effectively hedge our customers’ wholesale electricity costs and it will help us achieve our goal of becoming the preferred energy supplier to business customers across Australia.

“We are also actively talking to liable entities and generators outside our customer base about the opportunities this presents for us to provide a tailored service that helps them manage their carbon exposure.”

Liable entities cover a range of industries including chemicals, energy, local government, manufacturing, meat processing, mining, metal refining and smelting, and water supply and treatment.

From 1 July 2012, emissions units recognised under Australia’s carbon pricing mechanism are financial products under the Corporations Act 2001 and those providing financial services for emissions units, including offering advice and dealing in the market, must hold an Australian Financial Services (AFS) Licence or variation.

Guiver said the authorisation from ASIC underlined ERM Power’s position as the leading energy retailer for business customers in Australia.

“ERM Power has built its success on exceptional customer service and value, but we’re also leading the way in terms of the professional advice and product diversity we offer our customers,” Guiver said.

The independent Utility Market Intelligence (UMI) survey conducted during the year showed that ERM Power significantly outperformed its competitors in terms of customer satisfaction, ranking first in 19 out of 21 customer service and account management categories.

The authorisation, granted via a variation of ERM Power’s Australian Financial Services (AFS) Licence, allows ERM Power to provide financial advice on, deal in, and make a market for financial products including derivatives, carbon units, Australian carbon credit units, eligible international emissions units and miscellaneous financial risk products, to wholesale clients.