Carbon Market Worth $118B in 2008

LONDON, UK -- Despite the slumping economy, the value of the worldwide carbon market soared 84 percent in 2008 to reach $118 billion, and could reach $150 billion this year, according to New Carbon Finance.

Some 4 billion tonnes worth of carbon allowances changed hands last year, a 42 percent increase over 2007, the research firm found. The bulk of the transactions were European Union Allowances (EUA), representing 70 percent and 80 percent of the value.

A growing interest in secondary Certified Emissions Reductions (CER) for the Clean Development Mechanism (CDM) boosted their market share from 8 percent in 2007 to 13 percent in 2008. The credits are eligible for compliance under the European Union Emissions Trading Scheme (EU ETS) and Kyoto Protocol, as well as potential Australian and North American trading programs, according to New Carbon Finance, which is a division of New Energy Finance.

A smaller number of credits from the CDM entered the United Nations crediting approval process in 2008 than in 2007, leading to about 30 percent less purchased on the primary CER market. More projects entered the pipeline in 2008 but the number of smaller projects grew, mostly related to energy efficiency and renewable energy.

New Carbon Finance expects moderate growth in the European allowance market in 2009 but most growth will stem from more liquidity in the secondary CER market