Global Carbon Markets Plummet

by | Apr 6, 2012

The value of the world’s carbon markets declined by 21 percent over the last quarter, despite trading volumes above the historical average, according to analysis from Bloomberg New Energy Finance.

Global carbon markets fell to €14.2bn ($19.2bn) over Q1 2012, according to Bloomberg. This was 41 percent less than in the same period a year ago.

The drop is the result of a 50 percent decline in the volume-weighted average carbon price compared with Q1 2011, to €6.6/t over the last three months, Bloomberg says. Some 2.1bn metric tons of EU allowances and U.N. certificates were traded over the first three months of 2012, 17 percent more than a year ago, making this the largest first-quarter volume on record.

UBS carbon analyst Per Lekander told the Financial Times that the figures were worse than the markets expected, describing markets as “massively oversupplied.”

Bloomberg New Energy Finance expects volumes to grow by 39 percent over the year, on increasing auctioning volumes in the EU ETS. However the over-supply of carbon allowances in the EU ETS will continue to weigh on market values, which Bloomberg predicts will fall by 7.5 percent on an annual basis to €85bn.

The news comes as the U.K. postpones a planned auction of 4 million EU carbon credits from June to September, due to confusion over when a single EU-wide carbon registry will be launched, Reuters reports.

The European Commission has said that the Single Union Registry will not be online until at least June.

Earlier this month, Thomson Reuters Point Carbon predicted that offset supply will be the main long-term allowance price driver after California and Quebec link their emissions trading programs next year.

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