10 January 2012
The value of the global carbon market climbed 4% in 2011, despite dramatically lower prices in the largest market in Europe, according to analysis by Thomson Reuters Point Carbon. The Oslo-based firm put the value of the compliance-based carbon markets at €96 billion ($123 billion), based on transactions of about 8.3 billion allowances and credits, each equivalent to one tonne of carbon dioxide, at an average price of €11.45.The volume figure was up 19% on the 7 billion tonnes traded in 2010, but the average price of a tonne of carbon was down 12.5% from €13.09.
Europe’s carbon market accounted for 72% of the global carbon market volume and 80% of its value. Prices for the front-December EU allowance contract slumped from €14.43 at the start of last year to €6.60 on 3 January.
The analysis includes trades of allowances from the EU Emissions Trading System (ETS); certified emission reductions, emission reduction units (ERUs) and assigned amount units under the Kyoto Protocol; transactions under the Regional Greenhouse Gas Initiative (RGGI) and ETSs in New Zealand and Australia, as well as the nascent carbon market in California.
Senior carbon analyst Marcus Ferdinand noted that trading of ERUs from Joint Implementation projects picked up significantly in 2011, to 63 million tonnes in the secondary market, as issuance of the credits increased. However, it remained a minor part of the overall market, which was dominated by the 6 billion tonnes transacted in the EU ETS.
The analysis firm tracked about 3 million tonnes of trades in Californian credits, still insignificant even compared to the 90 million tonnes of allowances traded in the moribund RGGI programme, which caps power plants in nine north-eastern US states. However, by the end of 2011, the price of carbon in California was about $16 – twice that in Europe.
And despite the volatility in the European carbon price, trading in options was down slightly, Ferdinand said, to about 200 million tonnes.
Point Carbon expects to release more detailed analysis of 2011’s numbers and its forecasts for 2012 within a couple of weeks, he added.
Source: Environmental Finance