Analysts estimate that more than half of this total – Euro 1.25 trillion – would be traded within a US emissions trading scheme, while the EU ETS would have 23% of the global market.

Carbon market analysts Point Carbon also estimate that the total transaction volume will be 38bn tonnes of carbon dioxide equivalent per year by 2020, and carbon prices will have reached Euro 50 a tonne.

Carbon Market Transactions in 2020: Dominated by Financials, published on Thursday, assumes a cap-and-trade scheme along of the lines of the bill put forward by Senators Joe Lieberman and John Warner in 2007.

The bill would place an annually declining cap on emissions of the five primary greenhouse gases and establish the US Environmental Protection Agency as the body that would set the number of allowances available for purchase and trade from 2012.

The report also assumes that by 2020, trading schemes will operate in Australia, New Zealand, Canada, Japan, Korea, Mexico and Turkey, and international marine and aviation sectors will have been included.

Kjetil Røine, author of the report, said: “An indication of 2020 market size will say something about the place we think emissions trading will have in a future climate structure – not immediately after the end of the first Kyoto commitment period, but well into the post-2012 regime.

“This is important for long-term investors in sectors exposed to a carbon price.”

Senior analyst Endre Tvinnereim and co-author of the report added: “Looking at US and EU plans and policy statements, it is not unlikely that the two would link their carbon trading schemes in the next decade, creating a very large GHG cap-and-trade scheme.

“Such a joint scheme would combine all the attributes that would make it attractive to financial players and produce a high turnover rate.”

Kate Martin

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