Carbon Market Could Grow 33% This Year

Posted by Philip Dru on 1/30/10 • Categorized as Economy, Global Warming

The global carbon market is expected to total $170 billion this year, a 33 percent jump from 2009, driven mostly by higher prices in Europe and a growth in the nascent carbon market in the United States, according to a new report from Point Carbon, a market analysis firm.

The firm noted that much uncertainty remained this year, both for the prospects for an American carbon trading mechanism, as well as for an international mechanism, especially after the failure of the Copenhagen summit to reach mandatory carbon reduction goals.

The global carbon market reached $136 billion in 2009, up from $133 billion in 2008, and more than double what it was in 2007, when the market totaled $58 billion.

As a result of the uncertainty over carbon policy, the total volumes of carbon traded this year is expected to increase by only 5 percent this year compared with last, to a total of 8.4 billion metric tons – or gigatons – of carbon dioxide equivalent, according to the firm’s annual forecasts.

Still, the biggest growth is carbon trade this year is expected to come from the U.S. Regional Greenhouse Gas Initiative, a cap-and-trade system for the power sector covering 10 Northeastern and Mid-Atlantic states. These states, which include New York, Maryland, and Massachusetts, aim to reduce their carbon dioxide emissions from the power sector 10 percent by 2018.

Point Carbon expects the regional market to reach 985 million tons of carbon dioxide this year, with an expected value of $2.2 billion, a jump of 29 percent from 2009. This new market will make up 12 percent of the world’s global carbon market in 2010.

Europe’s Emissions Trading Scheme, the world’s top carbon market, is expected to be flat this year compared with last. Point Carbon sees the value of that market rising to $134 billion in 2010, from $100 billion in 2009, with 5.4 gigatons of carbon trading.

It anticipates higher price for the European Union Allowances, which it expects to reach 18 euros per ton, compared with their current price of 12.96 euros a ton.

NYT | JAD MOUAWAD | Fri, January 29, 2010

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