UK-based carbon offset aggregator Camco International Ltd grew its cash balance to 28 million euros ($40.3 million), the firm said in a trading update on Monday, but faces a steep climb to reach its 2012 offset inventory goal.

Camco received 14.4 million euros in cash proceeds for 4.6 million tonnes of Kyoto Protocol offsets, called Certified Emissions Reductions (CERs), in two deals signed in December.

We are very, very happy with these transactions ... we got a far greater price than the market price at the time, and the cash proceeds are non-recourse, said Yariv Cohen, Camco's chief carbon officer, adding that its CER costs remained around 8 euros a tonne.

Camco has increased its June 30, 2009 cash position of 18.3 million euros by over 50 percent. Camco shares traded up 1.5 pence or 10 percent at 16.5 pence at 1022 GMT.

For the three months ended in December 2009, Camco trimmed its in specie pre-2012 portfolio of Kyoto Protocol carbon offsets, saying it expects to get 30.3 million tonnes compared 30.6 million in its last update in September 2009.

In contrast, the company has received just 0.8 million tonnes to date, or just 2.6 percent of its pre-2012 target.

30.3 million is pretty high ... the CER yield curve is getting increasingly steep and as we get closer to 2012, the numbers are not getting as fat as they need to be, the reason being the ongoing delays at the UN, said equity analyst Agustin Hochschild at Mirabaud Securities.

We will need to see quite a healthy upswing.

Administrative delays and carbon auditor suspensions last year dented CER supply flows at the UN's climate change secretariat.

Camco noted an 80 percent increase in the number of its carbon projects that have undergone a first verification in emissions cuts, adding that it is expecting an increase in CER issuance in the coming months.

Hochschild called Camco's update positive and raised his price target to 42 pence, up from 35 pence.

Andrew Shepherd-Barron of KBC Peel Hunt raised his price target to 34 pence from 21 and increased his recommendation to a buy from a hold.

Despite a disappointing outcome from UN climate talks in Copenhagen last month and mounting obstacles ahead of a U.S. climate change bill, Camco's CEO was optimistic.

The Copenhagen summit resulted in a number of positive outcomes for our business. Furthermore, the latest developments in the USA present substantial business opportunities which we will pursue during 2010, Scott McGregor said.

You can never predict U.S. politics but I think things there are moving very positively.

Camco said proposed reforms to Kyoto's Clean Development Mechanism made in Copenhagen, expected to take effect in the latter half of 2010, will bring better clarity around delivery and registration as well as shorter regulatory timelines.

(Editing by Rupert Winchester)