Global carbon trading to grow by 20% in 2009

The global carbon market will see a 20% boost in volume in 2009, according to the latest figures from Point Carbon.

In its 2009 outlook report, Point Carbon forecast 5.9 billion tonnes (gigatonnes, Gt) of carbon dioxide equivalent (CO2e) would trade in 2009, compared to 4.9 Gt in 2008. But the increase represents a leveling off in volume, since it approximates transaction volumes seen in the second half of last year.

The global market will be worth €62.6bn (US $79.7bn) in 2009, compared to €92bn (US $117bn) in 2008 - a 32% drop. This will be the first year market value will contract since carbon trading started, according to Point Carbon.

The report predicted that the economic crisis would affect Clean Development Mechanism (CDM) and Joint Implementation (JI) projects, with primary Certified Emission Reduction (CER) volumes, generated by CDM projects, 45% down on last year to 300 million tonnes (megatonnes, Mt) in 2009. Primary Emission Reduction Unit (ERU) volumes, generated by JI projects will fall 44% to 40 Mt on 2008's figures.

However, increased spot trading will dull the effects of lower emissions to help the European Union's Emissions Trading Scheme (EU ETS) maintain its dominant position as the world's largest carbon market. Point Carbon predicts a 24% increase in trade over last year to 3.8 Gt. But, in line with the global market, the value of the EU ETS market will drop significantly to €45.2bn (US $58bn), a 33% fall from 2008.

On a more positive note, Point Carbon said the Regional Greenhouse Gas Initiative (RGGI) would see 339 Mt of CO2e traded this year, up from 71 Mt in 2008. This would give RGGI a 6% share in the global carbon market by the end of 2009.

RGGI, which covers 10 northeastern US states, saw its first forward trades and auctions last year and began its first compliance period on 1 January 2009.

Endre Tvinnereim, senior analyst at Point Carbon and author of the report, said: "The economic downturn will hit the value of global carbon markets as a whole but the US looks set to buck this trend and show healthy growth."

In addition, the market in Assigned Amount Units (AAU), which enables countries with emissions lower than their Kyoto targets to sell their surplus carbon allowances, is forecast to grow to 95 Mt in 2009, up from 18 Mt last year. Potential AAU seller countries are Central and Eastern European countries such as Ukraine, Poland, Hungary, Latvia and the Czech Republic.

Australia's federal Carbon Pollution Reduction Scheme market will transact a forecasted 24 Mt this year. Point Carbon also predicted 17 Mt CO2e would change hands in 2009 in anticipation of a mandatory federal cap-and-trade scheme in the US and Canada.