Carbon Market Could Jump 56% To $92 Billion In 2008

The global carbon market will see 4.2 billion tons carbon emissions transacted during 2008, up 56 percent from last year, according to research from Point Carbon. At today’s prices, that would make the market worth $92 billion.

The figures, published in a Point Carbon report “Carbon Market Analyst: Outlook for 2008,” see continued growth in the European Union Emissions Trading Scheme, which Point Carbon speculates will be worth some $68 billion in 2008. Options and auctions contribute to the increased volume in the EU scheme this year.

“We anticipate growth for several reasons,” said Kjetil Røine, Manager of Point Carbon’s Carbon Market Research team. “Primarily, the tightness of the Phase 2 cap will increase the traded volume compared to 2007 simply because more players are short of allowances. The proposed EU climate and energy package of January 23 of this year further strengthens this tightness.”

Point Carbon’s figures also show that developing countries continue to deliver reductions. The Clean Development Mechanism saw transactions of 947 metric tons in the primary and secondary markets in 2007, producing a combined value of $17 billion. While Point Carbon expects the primary CDM market to shrink in 2008, it believes that secondary transactions will continue to grow strongly. The forecast total volume of the CDM market in 2008 would be 1.2 billion tons CO2e, worth $22 billion at current prices.

Point Carbon also presents volume forecasts for a number of new markets, including the US ten-state Regional Greenhouse Gas Initiative, Kyoto country emission allowances and offset trades for future federal cap-and-trade schemes in the US, Australia and Canada. In total, carbon markets outside the EU ETS and CDM are predicted to see transactions worth $2.1 billion in 2008.