Global carbon market expands in volume but not in value
Greenwise Staff
7th January 2010
The global carbon market saw a 68 per cent hike in volume in 2009, but a fall in carbon prices brought on by the economic downturn meant the value of the carbon market stayed much the same as in the previous year.
According to research released yesterday by market analyst Point Carbon, the global carbon market saw 82 billion gigatonnes (Gt) of carbon dioxide equivalent (CO2e) exchange hands in 2009.
Despite this, the value of the global carbon market remained virtually unchanged against 2008 figures – €94 billion (£84 billon) in 2009 compared to €92 billion (£82.8 billion) in 2008.
The average world carbon price fell by around 40 per cent last year. Point Carbon’s weighted-average world carbon price last year stood at €11.40 (£10.2), down from €18.87 (£16.99) in 2008.
The growth in volume in the carbon market, nevertheless, reflected the rapid expansion in global carbon trading over the past three years, said Point Carbon, suggesting the robustness of the market compared to other global commodities in the current downturn.
“The expansion in carbon trading in 2009 was mainly due to a strong increase in the volume of European Union Allowances (EUAs) traded,” said Endre Tvinnereim, senior analyst at Point Carbon.
EUAs are traded on the EU’s Emissions Trading Scheme (EU ETS), the world’s first carbon cap-and-trade scheme. The EU ETS continued to see the lion share of carbon traded in 2009 – representing 68 per cent of global volume. In all, 5.6 Gt of carbon was traded on the EU ETS, worth €73 billion (£65.7 billion), or 77 per cent of global value.
The second biggest market was the the Kyoto Protocol’s Clean Development Mechanism (CDM), which allows industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries. In 2009, the CDM market saw 1.6 Gt of carbon traded, worth some €17.5 billion (£15.7 billion).
The Regional Greenhouse Gas Initiative (RGGI), the first mandatory emissions trading scheme in the US, was the third largest market and the one that saw the biggest growth last year. In 2009, 765 megatonnes (Mt) of CO2e worth €1.7 billion (£1.5 billion) where traded on the RGGI, compared to 71 Mt, worth €178 million (£160 million), traded in 2008.