Global carbon market to grow 14% this year but faces plunge in 2013
The volume of carbon traded globally will continue to grow by 14% to 12 gigatonnes (Gt) CO2e this year but is likely to drop by 15% next year, according to analysis.
The forecast, from market intelligence firm Thomson Reuters Point Carbon, comes despite a depressed market, which saw the price of carbon traded within the EU’s Emissions Trading Scheme (ETS) fall to record lows in January as European Union Allowances (EUAs) dropped below €5 per tonne of CO2.
Most of this year’s growth in volume will come from the 10 billion EUAs that will change hands this year, up 40% from 7 billion last year.
Thomson Reuters Point Carbon senior analyst Anders Nordeng said: “The reason for this surge in volumes is twofold; 2013 is the first year to see massive volumes coming to market through auctioning, triggering more exchange trades and current price volatility is driving persistently high levels of speculative trading.”
He added that although the temporary withdrawal of carbon permits from the market to help support prices, known as backloading, might provide some temporary stability and would raise carbon prices to around €6 per tonne, only structural reforms would permanently support prices.
Thomson Reuters Point Carbon predicts that next year, volumes traded on global carbon markets will drop significantly for the first time since the EU ETS was launched, to 10.5 Gt, a decrease of around 15%, before returning to moderate growth in 2015.
Within the EU ETS, the predicted decline in volumes next year, to around 9 Gt, is due to the backloading of allowances which would reduce primary, and thus also secondary trades, were it to be approved.