Thursday, February 23, 2012

Global Carbon Market will Grow in 2012 then Decline in 2013

As reported in Commodities Now, the carbon market will grow in 2012 and then fall in 2013. According to analysis by Thomson Reuters Point Carbon, despite depressed prices, the volume of carbon traded globally will grow by 13 percent in 2012, reaching 9.5 Gt CO2e.

Most of this year’s growth in volumes will come from the 7bn EU Allowances (EUAs) and 2.2bn Certified Emissions Reductions (CERs) that will change hands this year, up from 6bn and 2bn in 2011.

However, in 2012, global carbon markets are expected to enter their first decline in volumes since EU ETS was launched. Markets are expected to stall as they await the next wave of emission reduction programmes in 2015. Forecasts for the overall value of the markets indicate they will drop this year to €61bn ($80bn), a 36 percent reduction compared to 2011.

Carina Heimdal, author of the analysis said, “Next year activity in the secondary CER markets is set to drop by 40 percent while in the primary credit market we foresee limited activity for the next three years.”

“The picture is not entirely gloomy, however”, Heimdal said. “emerging carbon markets are growing, providing some optimism for the long-term, especially from the markets in North America, which will see the highest growth in relative terms, with traded volume reaching nearly 200 Mt in 2012, twice the previous year’s, worth an estimated €607 million”.

Heimdal added, “We expect both California and Quebec to ramp up their pre-compliance activity ahead of the launch of two new markets next year and the review of the North American Regional Greenhouse Gas Initiative (RGGI) is likely to lead to a tightening of the cap for the second compliance period, from 2012 to 2014”.

She also points to Australia, China and South Korea as countries that will take key policy decisions this year ahead of the planned launch of their own national emissions trading schemes in 2015. “Hence, traded volumes in carbon markets should grow again in 2015 as the next wave of programmes kicks in”, Heimdal concludes.

© 2012, Richard Matthews. All rights reserved.

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