Volume of Global Carbon Market to Grow 13% in 2012, Then Decline

by | Feb 23, 2012

The volume of carbon traded globally will grow by 13 percent in 2012 reaching 9.5 Gt CO2e, despite depressed prices, according to analysis by Thomson Reuters Point Carbon. However, after that, global carbon markets are expected to enter their first decline in volumes since EU ETS was launched, the company said.

According to their analysis, most of this year’s growth in volumes will come from the 7 billion EU Allowances (EUAs) and 2.2 billion Certified Emissions Reductions (CERs) that will change hands this year, up from 6 billion and 2 billion in 2011.

Activity within the EU ETS will be higher as utility hedging and portfolio management transition from Phase 2 of the scheme, which ends this year, to Phase 3. The ban of CERs from industrial gas projects in Phase 3 is expected to lead to higher secondary trading of the credits this year, the company said.

For 2013, with the uncertainty over emission reduction programs for 2015, Thomson Reuters Point Carbon forecasts the overall value of the markets will drop in this year to $80 billion for a 36 percent reduction compared to 2011.

Among the bright spots pointed to in the report is the growth of emerging carbon markets.

The State of California has said that it expects $1 billion in first-year revenue with the launch of the state’s emissions trading program.

In China, the National Development and Reform Commission ordered the cities of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen, and the provinces of Hubei and Guangdong to launch and run pilot carbon trading platforms, and develop implementation programs for broader use, as China takes aim at 17-percent reduction marks in the 2011-2015 timeframe, according to Reuters news reports.

According to Heimdal, the planned launch of national emissions trading schemes in Australia, Quebec and South Korea in addition to California and China should lead to growth in traded volumes in carbon markets by 2015.

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