The global carbon market grew to US$64 billion (€47
billion) in 2007 - more than doubling over 2006 - according
to a new report from the World Bank - State and Trends
of the Carbon Market 2008.
The European Union Emission Trading Scheme (EU ETS) also
saw a doubling of both value and number of allowances transacted
to the tune ofUS$50 billion (€37 billion).
The report's data shows that the global carbon market doubled
or tripled in value for all segments, except for projects
in developing countries, which saw a levelling-off of market
volumes transacted under the Clean Development Mechanisms
(CDM) - from 537 million tons of carbon dioxide equivalent
(MtCO2e) in 2006, to 551 MtCO2e
The report's analysis cautions that market momentum may be
at a crossroads for many developing countries, just as they
are beginning to reap the benefits of carbon finance and are
stepping forward to show that they are making efforts to mitigate
climate change through advancing clean energy technology.
The report shows that the CDM is delivering on clean energy.
Energy efficiency and renewable energy accounted for nearly
two-thirds of the transacted volumes in the project-based
"Sixty-eight developing countries participate in the CDM
- among them Jamaica, Kenya, Mali and Madagascar, which offered
climate-friendly projects for the market for the first time
in 2007. However, at a time when global cooperation to reduce
the risk of climate change is more important than ever before,
the prospects for developing countries benefiting from the
carbon market are in question. It would be a shame for the
world to lose this momentum now" - said Karan Capoor, senior
World Bank carbon markets expert and main author of the State
and Trends of the Carbon Market Report 2008.
The overall data in the report masks some key vulnerabilities
- especially for developing countries. All developing countries
face a demand gap sometime in 2008, when buyers realise that
there is not enough time to fulfil Kyoto commitments with
new projects and demand will have not yet kicked-in from emerging
markets in the US and Australia that are expected to be players
in a future market after 2012.
Added to that is the fact that the European Commission has
proposed freezing new demand for projects from developing
countries in commitments to reduce greenhouse gas emissions
“A doubling in the size of the carbon market is significant
growth, but the market is nowhere near meeting its full potential”
- said Andrew Ertel, President and CEO of Evolution Markets
Inc., one of the contributors to this year's report.
"Lack of clarity post-2012 and a levelling-off of primary
CDM volume is countering growth of commoditised markets, such
the EU ETS and secondary CDM trading. The market is truly
at a crossroads, as market participants fully appreciate the
complexity and risks of carbon trading. Where we go from here
is up to the market players and their perception of the regulatory
risk in all of these markets" - he added.
To download the report State and Trends of the Carbon
Market Report 2008 - Click