Global carbon market worth €38bn in H1 2008, up €22.2bn on H1 2007 and bucking global economic gloom

Oslo (08 July 2008)

The global carbon market has generated almost as much money in the first half of this year as it did throughout the whole of 2007, according to Point Carbon, the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets. A total of 1.8 Gt CO2e was traded globally in the first half of this year, worth some €38bn ($59bn), compared to €40bn for all of 2007. The aggregate worth of transactions in the first half of this year is already a full 94 percent of the value for all transactions in 2007. This is due to several factors, notably a higher average carbon price of €20.61 per tonne CO2e, up from €13.36 over the same period last year. Healthy EUA and secondary CER volume growth has also contributed. 

Of this 1.8 Gt CO2e, a massive 1.3bn was traded within the EU’s Emissions Trading Scheme (EU ETS), representing 70 percent of total trade so far this year, compared to 61 percent over the same period last year. Trades within the EU ETS generated €30bn over the first six months of this year, up 161 percent on the first half of 2007. 

Although the EU ETS dominates and is set to grow further with the inclusion of emissions from aviation from 2012, carbon trading activity has not been limited to the EU during the first six months of this year. In the Clean Development Mechanism (CDM) market, some 502 Mt CO2e was traded in the first half of this year, worth €7.6bn. This is up 27 percent and 20 percent, respectively, on the first half of last year. 

In addition, several new markets and market segments have been introduced, including the Regional Greenhouse Gas Initiative in the US, the trading scheme in Alberta, Canada, and the upcoming Australian federal Emissions Trading Scheme. 

The figures and conclusions, taken from Point Carbon’s Carbon Market Monitor’s Mid Year Review, show that global carbon markets are growing strongly, despite a global economic downturn. 

According to Endre Tvinnereim, Senior Analyst at Point Carbon and author of the Report, “for all of Kyoto’s shortcomings, the carbon market owes pretty much everything to the Kyoto Protocol. The market is no longer immature and precocious, but rather advancing on many fronts, both geographically and in terms of financial sophistication. Indeed, unlike other economic sectors hit by a global downturn this year, the global carbon market is in rude health”. 

Important developments are also in store for the remainder of 2008 including the issuing of EUAs by all participating governments. This will again make a real spot market in EUAs possible, similar to the spot market that was generated during the first phase of the EU ETS.

Elsewhere in the market, the greatest political event of the year will be the US presidential election. While both the presumed candidates have expressed support for cap-and-trade at the national level, important differences remain on issues such as auctioning. Most significantly, however, the election is set to usher in a new era of US engagement in international climate negotiations, regardless of who wins.

Point Carbon’s Carbon Market Monitor’s Mid Year Review, provides detailed comment and analysis of the CDM and JI markets, transactions and demand, the North American and Australian markets and on the likely policies of the Post-2012 period. To see the report, please contact Candida Jones. 

Note to editors 
The Kyoto Protocol on Climate Change, which entered into force in February 2005,  resulted in the launch of The EU’s Emissions Trading Scheme (ETS). The world’s first international emissions trading scheme, it works on a cap - and - trade basis, forcing companies to emit less carbon dioxide than their Kyoto target allows or buy carbon permits from elsewhere (CERs and ERUs). The second phase of the scheme runs from 2008-12 and coincides with the Kyoto Protocol commitment period. No timetable has currently been established for the post-2012 regime. 

The first Kyoto commitment period, from 2008 to 2012 inclusive, spans 60 months, six of which, or one tenth, have now passed. 

Certified Emissions Reductions (CERs) and Emission Reduction Units (ERUs) from Clean Development Mechanism (CDM) and Joint Implementation (JI) projects respectively, are project credits flowing into the global compliance market generated through emission reductions. EUAs (EU Allowances) are the tradable unit under the EU ETS. 

A number of countries and companies will make use of project credits from CDM and JI to be in compliance with their Kyoto targets. Reducing emissions outside one’s own site or country (“external abatement”) can be a cost effective alternative to internal abatement. 

The carbon market has seen substantial growth since its modest start in 2003. Globally, the traded volume of carbon contracts has increased from 28 Mt in 2003 to 2.7 Gt in 2007, with forecasted further growth to 4.2 Gt CO2e in 2008.

For comments or further more information, please contact:
Candida Jones
PR Manager, Point Carbon
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E-mail: perss@pointcarbon.com

Kjetil Røine
Manager, Point Carbon
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E-mail: kr@pointcarbon.com  

Henrik Hasselknippe
Director, Point Carbon
Mob: +47 92 82 77 64
E-mail: hha@pointcarbon.com  

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Intermarket Communications
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E-mail: jagins@intermarket.com  

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