Global Carbon Trading Volumes Grew 68% in 2009

by | Jan 8, 2010

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emissions-2The global carbon trading market grew 68 percent last year compared with the previous year, despite a global economic downturn. But the value of the market remained virtually unchanged after carbon prices fell, averaging $16.40 in 2009.

That’s down from $27.15 in 2008, according to a new report from Point Carbon, reports the New York Times.

The report shows the global carbon market reached $136 billion in 2009, up from $133 billion in 2008, and $58 billion in 2007, reports the New York Times.

Europe dominates the carbon trading market with the European Union’s Emissions Trading Scheme accounting for a 68 percent share, followed by the Clean Development Mechanism market, and the Regional Greenhouse Gas Initiative (RGGI), the first mandatory cap-and-trade system in the United States, reports the New York Times.

The study find that the RGGI grew nearly tenfold last year to $2.5 billion, reports the Wall-Street Journal. Although California plans to start a cap-and-trade program in 2011, the U.S. carbon market is largely a voluntary market dominated by financial players and companies that want to protect themselves from future emission-reduction rules, according to the article.

Analysts expect state governments to dominate the emerging U.S. carbon market in 2010 amid uncertainty that Congress will pass an emissions trading law this year.

Lenny Hochschild, a managing director at Evolution Markets in New York, told the Wall-Street Journal that the U.S. carbon market will be volatile this year due to uncertainty about the Senate passing a cap-and-trade bill this year. The House narrowly passed a climate bill last June.

Hochschild said in the article that carbon credits issued by the Climate Action Reserve are trading between $6 and $9 a ton of carbon.

The RGGI in the Northeastern States is starting its second full year with surplus permits that drove pricing down 41 percent in 2009, reports Bloomberg. Peter Shattuck, a research analyst at Rockport, Maine-based advocacy group Environment Northeast, said in an interview with the newspaper that demand for permits will depend on both economic growth and the price of natural gas.

Two other regional carbon markets, the Western Climate Initiative and the Midwestern Greenhouse Gas Reduction Accord aren’t scheduled to start until 2012, reports Bloomberg.

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