Environmental Leader

While nearly $150 million has been spent to date on carbon offsets from planting trees and preserving forests, the market is in a precipitous position.

Passage of a U.S. climate bill or a meaningful global climate deal would push the market to new heights. Without such government help, the market is likely to languish, perhaps even wither, according to the State of the Forest Carbon Markets 2009 report (PDF) from EcoSystem Marketplace.

At the Copenhagen talks, nations promised a $3.5 billion international scheme to reduce emissions from deforestation and degradation (REDD), with the U.S. alone pledging $1 billion, reports Reuters.

In 2008, the market for carbon offsets was $37.1 million, down 8 percent from the $40.5 million in 2007. Still, in 2006 the market was worth $7.6 million.

Prices for forest carbon offsets have ranged from $0.65/ tCO2 to more than $50/ tCO2, with a volume-weighted average price of $7.88/ tCO2.

The highest prices have come from the compliance markets, where the volume-weighted price average is $10.24/ tCO2 over time. The voluntary OTC market averaged $8.44/ tCO2 and the CCX was $3.03/ tCO2.

For a look at historical trading volume, see the chart below.

The report received funding and support from the World Bank BioCarbon Fund, Biological Capital, Ecosystem Restoration Associates, and Baker McKenzie, the United States Agency for International Development (USAID), the David and Lucile Packard Foundation, the Norwegian Agency for Development Cooperation, the United Kingdom’s Department for International Development and the Surdna Foundation.

click to enlarge