Reuters, PlanetArk 14 Jan 10;
LONDON - The market for voluntary carbon offsets is pinning its hopes on growth this year after demand stalled in 2009 as companies cut back spending on reducing their carbon footprints due to the economic slowdown.
"Hopefully we can go back to some growth so people will look at carbon markets more seriously. It's hard for people to put (emissions cuts) at the top of their agenda when countries aren't doing it," Gilles Corre, head of carbon structuring at Tullett Prebon, told Reuters.
The failure of a U.N. summit in Copenhagen last December to clinch a legally binding climate pact disappointed many investors who hoped it would create more certainty about the future of carbon markets.
"Paradoxically, Copenhagen might be good for the voluntary market. While there is no certainty in terms of compliance, there is still the need to do something which means people get involved in the voluntary market," Corre said.
The unregulated voluntary market operates outside mandatory emissions cut schemes such as the United Nations' Clean Development Mechanism or the European Union's Emissions Trading Scheme.
While January is traditionally a quiet month, demand is ticking over for so-called exotic, Voluntary Carbon Standard, renewable energy, forestry, and U.S. credits, while prices have not changed much since the end of 2009.
Brokers MF Global saw a significant boost in demand on December 29-30 when offset retailers scrambled to square their books.
"We closed nearly 300 kilotonnes which in our market is very good," said Grattan MacGiffin, MF Global's head of voluntary carbon markets, after fears that last-minute December buying activity would not materialize.
The emergence of a federal emissions trading scheme in the United States could boost demand for offset credits further. But U.S. lawmakers face an uphill battle to enact a climate bill in 2010 after a global pact failed to come out of Copenhagen.
Chicago Climate Exchange chairman Richard Sandor was optimistic last week about the growth of voluntary carbon markets in the United States even if a federal cap-and-trade system fails to materialize.
Regional moves, such as the Western Climate Initiative, were gaining traction, he told Reuters in an interview.
