January 14, 2009

Carbon Market Up 83% In 2008, Value Hits $125 Billion

The global carbon market in 2008 grew faster both in terms of volume and value than estimated, dramatically bucking the current downturn which has depressed most global commodity trading.

Overall, 2008 saw 4.9 billion tonnes (gigatonnes or Gt) of carbon dioxide equivalent (CO2e) change hands, up 83% on 2007, according to a recent report - Carbon Market Monitor - released by Point Carbon.

The carbon market’s total value for 2008 was estimated at €92bn (US$125bn), more than double the €40bn it was worth in 2007. This results in a present weighted average, global carbon price of $26 (€19) per ton of CO2e.

Taking each market segment separately, within the EU’s Emissions Trading Scheme (EU ETS), a total of 3.1bn EUAs were bought and sold in 2008, double the 2007 figures and with a total value of €67bn ($90bn). Over 350m EUAs changed hands in October alone, taking the 2008 total to over 3.1 billion, according to Point Carbon figures.  These figures illustrate that the EU ETS accounts for two-thirds of the total carbon market volume and three-quarters of its value.

The largest trading platform was still the over-the-counter (OTC) market, which traded 49 percent of the volume, with the share of carbon deals traded by exchanges, such as Bluenext and the European Climate Exchange (ECX), up to 37 percent.  In the final month of 2008, Paris-based Bluenext saw the majority of carbon deals, enabling it to overtake the European Climate Exchange (ECX) as the world’s largest carbon exchange.

Meanwhile, within the Clean Development Market (CDM) segment of the global carbon market, some 1.6 Gt CO2e changed hands last year, worth €24bn ($32bn). The secondary market in Certified Emissions Reductions (CER) totaled 1 Gt in 2008, corresponding to two-thirds of the total CER market volume.  In all, the CER market is up 70 percent from 2007 and has doubled in value.

Other markets saw 123 Mt CO2e change hands, valued at €481m ($640m). The largest segment in this category was the Regional Greenhouse Gas Initiative (RGGI), the first mandatory, market-based effort in the US, where 70 Mt CO2e changed hands last year with a value of €180m ($240m). These figures show that when it comes online later this year, the RGGI will become the world’s third largest carbon market.

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