World CO2 Market Volume Seen Up, Value Down In '09

Nina Chestney PlanetArk 25 Feb 09;

LONDON - The volume of carbon dioxide traded globally this year will increase by 20 percent to 5.9 billion metric tons from 4.9 billion in 2008, research group Point Carbon said on Tuesday.

But the global carbon market's value will drop 32 percent to 62.6 billion euros ($79.76 billion) from 92 billion last year, due to the falling prices of carbon emissions permits, the group forecast in a report.

The price of carbon permits called European allowances (EUAs) traded at 9.39 euros a metric ton on Tuesday.

EUAs have lost over two thirds of their value since July 2008 and have almost halved in price since January 1 as participants have monetized assets in the economic downturn.

In January, research group New Carbon Finance forecast the market's value at $150 million in 2009, in spite of the gloomy world recession backdrop.

The European Union's emissions trading scheme will continue to dominate the global market, with volume rising 24 percent to 3.8 billion metric tons over the past year, mostly due to increased spot trade. But its value will shrink by 33 percent to 45.2 billion euros in 2009, Point Carbon forecast.

The U.S. market is likely to grow, however. The Regional Greenhouse Gas Initiative (RGGI) will grab a 6 percent share of the global carbon market by the end of the year, as auctioning volume and secondary market activity grow, the report said.

RGGI is a group of 10 states in the U.S. Northeast and mid-Atlantic which formed a cap-and-trade market. Its second carbon permit auction in December pulled in nearly $107 million for clean energy projects.

"The economic downturn will hit the value of global carbon markets as a whole but the U.S. looks set to buck this trend and show healthy growth," Endre Tvinnereim, senior analyst, said.

(Editing by Keiron Henderson)