Carbon market doubled in value in 2008 – World Bank
27 May, 2009
The carbon market grew by 100% in value between 2007 and 2008, to more than $126 billion, according to the World Bank.
The figures, released today in its annual State and Trends of the Carbon Market report, are slightly higher than earlier estimates released by analysts – with Point Carbon agreeing on the dollar number, but disagreeing on growth (it gave a higher value for 2007, giving 80% growth) while New Carbon Finance gave a dollar figure of $118 billion in 2008, up 84% on 2007.
However, the World Bank found that primary transactions in the Kyoto Protocol’s project-based mechanisms – that is, direct purchases of carbon credits from Clean Development Mechanism (CDM) and Joint Implementation (JI) projects – both shrank in 2008, in both volume and value terms.
Primary CDM transactions equivalent to 389 million tonnes (Mt) of carbon dioxide (CO2e), worth $6.5 billion dollars, closed in 2008, down 29.5% in volume and 12.3% in value from 2007.
JI, meanwhile, was down to 20Mt from 41Mt, and $294 million from $499 million – falling 51.2% and 41.1% respectively.
However, trading in the secondary CDM market was up 350% in volume, to 1,072 Mt, from 240Mt, and was worth $26.3 billion, up from $5.45 billion.
Trading in the EU Emissions Trading Scheme was also dramatically up, to 3,093 Mt, from 2,060 Mt – with that market worth $91.9 billion, up from $49.1 billion the previous year.
Karan Capoor, of the World Bank’s carbon finance unit, and the report co-author, said that transactions of assigned amount units (AAUs) “provided significant competition to project deals” in the last year – the report gave a figure of 18 million of AAU transactions, worth $211 million, up from zero in previous years. These were followed, in early 2009, by another 70 Mt of further transactions.
Such deals – of surplus, government-allocated AAUs – carry less risk and regulatory uncertainty than CDM or JI deals, Capoor said.
The report is based upon the World Bank’s database of projects, with assistance from broker Evolution Markets.
