August 16, 2007 (Environmental Finance) — Volumes in the world’s carbon markets were up 45% year-on-year to 1.2 billion tonnes in the first six months of 2007, according to research from Point Carbon.Carbon allowances and permits worth €15.8 billion ($21.2 billion) were traded in the first six months of 2007 compared with €22.5 billion in all of 2006, an increase of 41% in annualised terms, according to the Oslo-based analyst company.
The European Union’s Emissions Trading Scheme (ETS) saw two-thirds of the traded volume, with the equivalent of 775 million tonnes (Mt) of carbon dioxide (CO2e) changing hands at a financial value of €11.5 billion.
The EU ETS, the world’s first international emissions trading scheme, which was launched in January 2005 to help the EU meet its targets under the Kyoto Protocol, requires companies to emit less CO2 than their target or buy carbon permits to make up any shortfall.
The EU ETS covers more than 10,000 power stations and other stationary sources of greenhouse gas emission in the EU’s 27 member states.
Most of the growth in trading was in forward contracts for the second phase of the scheme, which runs from 2008 to 2012.
In the UN-administered Clean Development Mechanism (CDM), involving projects in developing countries that limit or reduce GHG emissions, 372Mt CO2e was traded, to the value of €4.1 billion. The secondary market in issued CDM credits doubled from 40Mt and €571 million in all of 2006 to 80Mt and €1.3 billion in the first half of 2007.
“We’re seeing a spectacular growth in the carbon market. This is good news because CO2 trading is an essential tool in the fight against human-induced climate change,” said Endre Tvinnereim, senior analyst at Point Carbon. “The EU ETS and CDM have almost the same market share as last year, but the strong growth in the secondary CDM market and in the EU ETS Phase II have made the market much more dynamic.”