Carbon market growth stalls in 2009

Point Carbon, 26 October 2009 - The world carbon market will be worth $122 billion in 2009, just $3 billion higher than last year.

The forecast, from UK research group New Energy Finance, marks a severe drop in growth amid the global economic downturn. 

Turnover in the carbon market totalled $119 billion in 2008, up 83 per cent on 2007 when $65 billion worth of carbon products traded. 

The downturn led to lower demand for emission allowances in the EU emissions trading scheme (ETS), the world's biggest carbon market, and reduced prices across all carbon products, the report said.

“These figures show that the carbon markets have not been immune from the recession,” said Guy Turner, head of carbon market research at New Energy Finance, in a statement.

“However, pending the passage of legislation in US, Japan and Australia… the global carbon market should see continued growth post-2012 driven by increasing volumes and prices,” he added.

The analysts said the value of the carbon market could grow to $1.9 trillion by 2020.

EU slump

The EU emission trading scheme (ETS) remains the dominant market, accounting for 83 per cent of the global market in the third quarter of this year.

But the European market has suffered from the impact of a VAT fraud scandal in spot EU allowances, which cut its market share from 88 per cent in the second quarter, the analysts said.

Secondary market in UN-backed certified emission reductions (CERs) represents the next biggest carbon market, with 14.3 per cent of global turnover in the third quarter, the report said.

Short-lived US growth

The US Regional Greenhouse Gas Initiative (RGGI) has seen a pick up in volume traded over the year, but the analysts warned this growth may not last as prices will likely fall further.

“We expect to see a further decline in price, towards the auction reserve price ($1.86) as we are unable to indentify any bullish factors for the RGGI market,” the report said.

Trade in the RGGI market represented around 2.4 per cent of the entire carbon market in the third quarter, up from 2.0 per cent in the previous quarter.

Author Ben Garside Publication Date 26 Oct 2009 Document Type News articles Issue/Topic Energy & Climate Source PointCarbon Include In RSS Business & Sustainable Development News Energy & Climate News