The restriction in the free issue of carbon credits is going to be essential to limit the supply of credits, to encourage the take up of carbon offsets. Hopefully this will be agreed in the run-up to the commencement of the second phase of trading in 2008. This is to my mind one of the biggest risks with this share, its bad enough having a business relying on the policies of any one government, but we are reliant on all the european countries to agree much reduced credits...
There has also been wider discussion of green taxes in the UK, which if the EU trading scheme works, could be an answer to this - For example making airlines obtain carbon credits to offset what they pollute.
2006 and 2007 are all going to be about the rollout of biodigesters and increasing the amount of carbon credits generated and really consolidating on the first mover position. It will probably only be from the start of 2008 that the financial benefits of this investment really kick-in, so for me this is a LTBH share.
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