CO2 market totals EUR 96 bn in 2011

Jan 11, 2012 12:00 AM

by Jeff Coelho

Carbon markets across the world were valued at EUR 96 bn ($ 122.28 bn) last year, up 4 % on 2010, helped by a surge in trading activity as record low carbon prices stoked volatility, an analyst report said.
The value of the EU Emissions Trading System (ETS), the world's biggest carbon market, grew by 6 % to an estimated EUR 76 bn, said analysts at Thomson Reuters Point Carbon.

Overall traded volume in so-called EU Allowances (EUAs), including options and auctions, reached around EUR 6 bn last year, a 17-% increase on 2010.
"The growth in value was relatively smaller than the volume growth due to lower prices," the report said, noting the average weighted EUA price in 2011 was more than a euro below the price in 2010, due to economic concerns and a glut in permit supply.

Benchmark EUA prices collapsed to a record low EUR 6.30 a ton on December 14, and prices ended 2011 around half of their value from the start of the year.
The ETS, the 27-nation block's main policy instrument to fight global warming, caps carbon dioxide (CO2) emissions on over 10,000 power and industrial plants. It covers around half of the block's emissions of the greenhouse gas.

UN-backed markets mixed
The EU carbon market is also the biggest buyer of carbon credits issued under the Kyoto Protocol's Clean Development Mechanism (CDM), which awards rich country investments in emissions-reduction projects in the developing world. But the CDM market last year was beset by a record issuance of credits, which weighed on prices in the world's second biggest carbon scheme.
Point Carbon analysts valued the market for UN-issued Certified Emission Reductions (CERs) at EUR 17.8 bn in 2011, down nearly 2 % from the previous year. Yet traded volume in CERs rose by a third due to heightened activity as CER prices sank to record low levels.

The Kyoto Protocol's Joint Implementation market, which issues carbon credits to emissions-reduction projects in developed countries, saw its value grow by 40 % to EUR 716 mm, according to Point Carbon analysts. They cited a rise in issuance of JI credits and a surge in supply from Russia.
"Higher issuance led to declining prices, but also higher traded volume in the secondary market."

The value for Assigned Amount Units, which are tradable emissions rights for parties under the 1997 Kyoto pact, fell 12 % to a 2011 estimated value of EUR 406 mm.
The North American carbon market's value also declined, falling to EUR 221 mm in 2011 compared with EUR 367 mm in 2010. Point Carbon attributed the near 40-% drop in value mainly to limited activity in the over-allocated Regional Greenhouse Gas Initiative, a cap-and-trade scheme covering nine US states in the northeast.

Elsewhere, the value of New Zealand's carbon market rose to an estimated EUR 106 mm compared with its 2010 value of EUR 91 mm.
Traded volumes grew by 25 %, as the price of New Zealand units followed the volatile CER prices.

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