Carbon prices lower, but volume up by 124 per cent
Elaine Brass
7th July 2009
The first half of 2009 saw the global carbon market grow by a massive 124 per cent in terms of volume – although the economic slowdown meant in terms of value it only grew by 22 per cent, according to a report by forecaster and analyst for the energy and environmental markets Point Carbon.
According to Point Carbon's Carbon Market Monitor’s Mid-Year Review, 4.1 gross tonnage (Gt) of CO2 equivalent (CO2e) was traded during the first six months of 2009 taking the
financial value of the global carbon market to €46 billion (£40 billion), prompting the analyst to claim the global carbon market is not only bucking the global recession, but is in fact being fuelled by it.
Henrik Hasselknippe, global head of Carbon Analysis at Point Carbon Trading Analytics and Research, said: “Prices are lower due to the economic slowdown but volumes are much higher as many depressed industry sectors in Europe have decided to trade their surplus carbon allowances illustrating how the economic slowdown is, in effect, increasing market activity in the carbon sector."
The EU’s Emissions Trading Scheme (EU ETS) was the dominant market worth €39 billion (£33.6 billion), up 140 per cent on last year and generating 75 per cent of the total global carbon market, trading a total 3.1Gt CO2e; the north American Regional Greenhouse Gas Initiative (RGGI) reached 321 Mt CO2e, generating $1.2 billion (£73 million) and the market for Assigned Amount Units (AAUs), saw strong growth as the first AAU transactions only took place in the autumn of 2008 but by 2009 the AAU market represented two per cent of the global carbon market both in terms of volume and value.
However, some carbon markets contracted. The Clean Development Market (CDM) was down 28 per cent compared to the same time in 2008, generating €5.4 billion (£4.6 billion).
"These reductions in volume and value reflect the fact that the economic downturn has seen future demand for (and supply of) these types of credits declining in favour of allowances which have already been issued. In addition, the project market appears uncertain given the lack of clear policy signals emerging from the current round of climate negotiations set to conclude in Copenhagen later this year,” said Hasselknippe.