Real Analysis of the Credit supply for Phase II

For the last few months I have been pondering the demand and supply issues as the relate to new credits coming to market. There has been little analysis that I have seen that seriously considers what will be the state of the market credits at the end of Phase II.

This is important for the new funds that are pumping out new CERs and ERUs. Will we have another long market by the end of the phase?

Sure, sure, there are many, many, NUMEROUS variables to consider. The 10% rule of supplemental new credits, the actual performance of projects, the new sectors and/or countries that might enter the fray before end phase II, the relatively easy approval process of projects, and even the abatement processes underway, the ability of surplus nations to finally cotton on to the EUA market by 2012 and sell their euas.

I have only touched on small number of issues and I would appreciate hearing from more readers regarding this.

But what I am getting at is this: What will be the real number? No one can tell because of the amount of new money chasing credits.

WHY AM I SO CONCERNED?

Because, .... I am not involved in a fund creating new credits.

Pitch: (avoid if you like) I really believe in our ability to get a lot of middle to lower tier credits projects. Lots of them. Really. Its something to do with our access, our money under management and the owner of the company who has been doing this for quite some time now in the regions. We are lean and hungary.

Also, the cash flow for our projects: its so interesting to see the profitability of this financial fund (no we do return to investors credits but financial gains) even if we discount the credit prices, the success rate of projects, and the overall market performance. I am so so conservative and yet it comes up good. It could possiblly come out fantastic, but I am happy with a a 300% gain over the Phase II.

Ok , pitch over. The problem is that no one really can quote a number (even after reading Societe Generale and UBS Carbon reports, and the overlly optimistic Point Carbon) of credits by the end of the Phase. Not even ball park in my estimation although the organizations make a stab at it.

So, please tell me your opinions. I am dying to hear. Send me a note: emissionstrading at gmail com