Riding the carbon tiger
'We've had a difficult year' ... Nick Armstrong. Photo: Josh Robenstone
NICK ARMSTRONG epitomises the boom and bust of carbon trading.
In September, the 28-year-old chief executive of COzero was hailed as the youngest debutant on BRW's Young Rich List, sharing a fortune the magazine speculated at $22 million with partner Geoff Alexander.
COzero, founded in 2007 with the help of credit card debt, also topped BRW's Fast 100 list last year with an average annual revenue growth of 604 per cent in the three years to June 2011.
"We were lucky. We walked into a new commodity and a new market at a time when there weren't big incumbents,'' the entrepreneur said.
COzero's main business is aggregating and on-selling credits generated by renewable energy and energy-efficiency programs. An installer of a solar photovoltaic (PV) panel, for instance, receives a certificate that can be sold to traders.
Last month, the government triggered howls from the PV industry and traders when it suddenly accelerated a cut to the solar rebate by six months.
"We've had a very, very difficult year,'' Mr Armstrong said, with the six staff processing solar rebates cut to one. The company has cancelled plans for a share sale, closed its Melbourne office and slashed its staff from 25 to 12 to stem losses expected this year.
Mr Armstrong said the Coalition's promise to eliminate the carbon price may see him head overseas in search of other ventures. "If they scrapped it completely, we'd really struggle to have a business.''
COzero, meanwhile, has diversified abroad, investing in 20 greenhouse gas abatement projects in China, the values of which have tumbled along with the global price of certified emission reductions (CER).
“From a market perspective, the CERs have lost 95 per cent of their value this year,” he said. “We’ve had to writedown significant value.”
The drop has prompted COzero to cut its China-based staff from five to two.
Still, Mr Armstrong cautions against giving up on the industry, noting climate talks now on in Qatar could see a renewed emphasis on carbon pricing.
"If you're going to wait until it's all certain, you're going to miss the boat.''