2008 Sees Explosive Growth In Carbon Market

Jan 14 2009 | 4:34pm ET

The global carbon market in 2008 grew faster both in terms of volume and value than estimated, dramatically bucking the current downturn which has depressed most global commodity trading.

Overall, 2008 saw 4.9 billion tons of carbon dioxide change hands, up 83% on 2007, according to a recent report by Point Carbon.

“Even Point Carbon did not fully predict the extent of the dramatic expansion in global carbon trading. This overshoot of our original forecast is largely due to brisk EU allowance (EUA) trading in the fourth quarter and to high activity in the secondary CER market,” said Endre Tvinnereim, senior nalyst and author of the report.

The carbon market’s total value for 2008 was estimated at €92 billion (US$125 billion), more than double the €40 billion it was worth in 2007. This results in a present weighted average, global carbon price of $26 (€19) per ton of CO2e.

Taking each market segment separately, within the EU’s Emissions Trading Scheme (EU ETS), a total of 3.1 billion EUAs were bought and sold in 2008, double the 2007 figures and with a total value of €67 billion ($90 billion). Over 350 million EUAs changed hands in October alone, taking the 2008 total to over 3.1 billion, according to Point Carbon figures.

The largest trading platform was still the over-the-counter market, which traded 49% of the volume, with the share of carbon deals traded by exchanges, such as Bluenext and the European Climate Exchange, up to 37%.

In the final month of 2008, Paris-based Bluenext saw the majority of carbon deals, enabling it to overtake the European Climate Exchange as the world’s largest carbon exchange.

Meanwhile, within the Clean Development Market segment of the global carbon market, some 1.6 Gt CO2e changed hands last year, worth €24 billion ($32 billion). The secondary market in Certified Emissions Reductions totaled 1 Gt in 2008, corresponding to two-thirds of the total CER market volume. In all, the CER market is up 70% from 2007 and has doubled in value.

Other markets saw 123 Mt CO2e change hands, valued at €481 million ($640 million). The largest segment in this category was the Regional Greenhouse Gas Initiative, the first mandatory, market-based effort in the U.S., where 70 Mt CO2e changed hands last year with a value of €180 million ($240 million).

These figures show that when it comes online later this year, the RGGI will become the world’s third largest carbon market.


In Depth

Creating An Offshore Hedge Fund Dream Team: The Seven Key Players

Jun 26 2015 | 6:47am ET

If you want to set up an offshore hedge fund, like any great team, you’re only...

Lifestyle

Hedgies Set to Compete in Wall Street Decathlon

Jun 8 2015 | 12:37am ET

The Wall Street Decathlon — a 10-event physical challenge that will crown “Wall...

Guest Contributor

6 Essential Principles To Balance Your Investment Risk

Jun 26 2015 | 10:07am ET

In this article, financial expert Greg Silberman explores how to hedge a private...

 

Editor's Note