Global Climate Talks Set Carbon Offsets in Motion, Market May Quadruple by 2015

November 2, 2009

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The success of the emerging global carbon market rests on the outcome of the Copenhagen Climate Conference in December, according to a report from market researcher Frost & Sullivan. In the meantime, European Union leaders have agreed on a climate deal to present at the global climate talks. But analysts say the biggest polluters, such as energy and utility companies, will be the biggest winners in a climate deal as they capture low carbon subsidies thanks to their financial clout.

As an example, the European Union (EU) wants to lower greenhouse gas (GHG) emissions by 20 percent over 1990 levels by 2020, and by up to 30 percent if an agreement is reached in Copenhagen, cites Frost & Sullivan.

Research from Frost & Sullivan’s Asset Management — European Emissions Trading Market shows that the emissions reduction market earned revenues of $94.28 billion in 2008 with projections to reach $344.64 billion in 2015.

The research indicates that international agreements on climate change after 2010 will drive the global carbon market to the next stage of development. In addition, the U.S. emissions trading market is expected to be three times larger than the EU market, which will push greater participation by financial institutions, said the analyst.

The research finds that growth in the emissions trading market is largely contingent upon global regulatory support for carbon emissions reduction initiatives and on the expected increase in energy prices. Even under current economic conditions, the European emissions trading market will grow, although at a slower rate, because trade volumes are looking up even though European Union allowance (EUA) carbon prices have shrunk.

Despite market opportunities, participants are concerned about the use of project credits like certified emissions reduction (CER) and emissions reduction units (ERUs) after 2012, which are often subject to procedural delays under the clean development mechanism (CDM) and joint implementation (JI), according to the report. The report also finds the role of these credits after 2012 is uncertain and hinges on whether a deal is reached in Copenhagen.

Industrialized countries including Australia, Norway, New Zealand, and Japan have launched or are expected to launch cap-and-trade systems, which once linked will likely result in better carbon prices, according to the report.

European Union leaders including those in Britain and Denmark have agreed on a climate deal ahead of the global climate talks in Copenhagen, but east European officials said they still have to determine how to divide the bill for helping countries deal with climate change, reports Reuters.

Nine east European countries say some wealthier regions in developing countries are better off than parts of poorer European states such as Romania, and excessive handouts could stall the region’s economic recovery, according to Reuters.

Developing countries have maintained over the past several months that they will not address climate change without funds and technology from rich nations.

Analysts believe that big energy, utilities and engineering companies, among some of the biggest polluters, are using their financial clout and market awareness to capture low carbon subsidies and to own the most viable low-carbon technologies, reports Reuters.

They also get government incentives as big emitters, reports the news agency.

Researchers and scientists aren’t happy that oil firms, utilities and big engineering companies may hold the keys to a low-carbon future, and they worry that insufficient public funds are reaching start-up companies and entrepreneurs, report Reuters.

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Reader Comments

There are many reasons why Cap and Trade is wrong,
whether or not you believe that emissions should be lowered
http://www.ceolas.net/#cce5x
Emission Trading (Cap and Trade)
Basic Idea — Offsets — Tree Planting —
International Trade: Manufacture Shift — Fair Trade — Surreal Market — Allowances: Auctions + Hand-Outs — Allowance Trading —
Companies: Business Stability + Cost — In Conclusion

As it happens,
if there is to be an emission policy,
Electricity and Transport sectors alone (80% of emissions) are sufficient to meet emission reduction targets,
with measures advantageous in themselves (including energy renewability, and that emissions contain much else, whatever about CO2),
long term funded for reduced consumer price impact,
without efficiency regulation, industrial carbon taxes or cap and trade schemes
http://www.ceolas.net/#cc1x
.

peter dublin | November 2nd, 2009

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