Carbon Trading May Reach $395B in 2014
The connection between carbon capture and sequestration (CCS) and the carbon emissions trading market is growing, as carbon credits accrued from CCS plants will be traded at carbon exchanges, generating more revenue for CCS project developers, according to a new report from ABI Research.
ABI’s study, “Carbon Capture, Sequestration and Emissions Trading: The Outlook for Global Carbon Markets,” evaluates two leading market mechanisms — CCS and carbon emissions trading — for reducing carbon emissions.
ABI Research says CCS allows heavy industries responsible for the greatest amount of carbon emissions to use new technologies to capture the CO2 they generate and store it safely for long periods. The market research firm projects that $14.6 billion will be invested in 73 new CCS projects that will prevent 146 million tons of CO2 from 2009 to 2014.
A recent audit of the world’s CCS projects, conducted by Global Carbon Capture and Storage Institute, indicates that carbon capture and storage could lower CO2 emissions by about 19 percent.
In carbon emissions trading, governmental or regulatory bodies issue a limited number of allowances or offsets that allow companies to legally release carbon dioxide, but if the emissions exceed a company’s number of allowances, it must buy or trade for more, or face stiff penalties, says ABI.
The market researcher forecasts that the global carbon emissions trading market will reach $395 billion in 2014, more than three times the $118 billion in allowances traded in 2008
Atakan Ozbek, the study’s author, says in a press release that carbon emission credits need to reach the price of at least $40 per ton of CO2-equivalent for CCS projects to reach commercial status, together with effective policies and regulations and advances in both carbon capture and storage technologies.
A similar study shows that the financial impact of regulating coal-fired power plants that produce carbon dioxide emissions under a cap-and-trade system is much less than previously projected, and a CCS option could keep the price of carbon credits low. This report finds that for coal-fired plants the break-even price for the adoption of CCS technology is just $25 to $30 per ton of carbon dioxide emissions.
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