Global carbon market sees 84 per cent rise in 2008
Greenwise Staff
13th January 2009
The value of transactions in the global carbon market grew to £81 billion ($118 billion) in 2008, an 84 per cent jump on the previous year.
The figures, released by carbon intelligence service New Carbon Finance (NCF), show the number of deals closed in 2008 was 42 per cent higher than in 2007, but due to higher carbon prices being reached, the rise in their value doubled.
However, the same level of growth is not expected to continue in 2009 due to the global economic downturn. Carbon prices have already been hit by the uncertain economic climate. NCF said it expected growth to continue at a slower rate, reaching £103 billion ($150 billion) in 2009.
The global carbon market is made up of a collection of different carbon trading programmes, including cap and trade schemes, in which big polluting companies have to buy carbon allowances from those that pollute less if they go over their allowance, and offsetting schemes. The Kyoto Protocol’s Clean Development Mechanism (CDM) allows industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries.
The biggest cap and trade scheme is the European Union’s Emissions Trading Scheme and that market continued to dominate the volume of carbon emissions traded in 2008. NCF said it accounted for 70 per cent of the volume and 80 per cent of the value of carbon emissions traded.
However, NCF said secondary or ‘guaranteed’ Certified Emission Reductions, the main currency of the CDM, increased their market share from eight per cent in 2007 to 13 per cent in 2008.
NCF predicted that most of the growth in the carbon market in 2009 would come from the secondary CER market with the future of the CDM looking more secure following improvements to the mechanism reached at the international climate change negotiations in Poznan in December 2008.
Several other carbon trading initiatives have also been introduced or are being introduced that should also help push up the value of the global carbon market. They include the Greenhouse Gas Initiative in the US, the trading scheme in Alberta, Canada, and the Australian Emissions Trading Scheme.
Meanwhile, some analysts predict that the introduction of a greenhouse gas cap and trade scheme in the US under Barack Obama’s presidency could see the global carbon market reach £1.9 trillion ($2.7 trillion) by 2020.