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

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.