Thursday, March 04, 2010

$2 Trillion CO2 Market at Risk- -Assessment Service Needed

It is being reported by Reuters that investors estimate the global carbon market to be worth about $2 trillion by the end of the decade. These investors believe the absence of a legally binding global climate deal and a federal emissions trading scheme in the United States are standing in the way of the market in global greenhouse gas (GHG) emissions trading growing to achieve yearly turnover of $2 trillion by 2020.

The Center is particularly disappointed in the lack of movement by the USA in this area because we have our own GHG allowance trading and offset services [See CMX and GCB]. We are also disappointed that EPA has decided to push back regs on smaller entitities to 2016 because they believe it would represent a burden. We believe it would represent opportunities for innovation.

The market for carbon credits was worth around $136 billion last year, according to analysts Point Carbon. They also predict a lower global carbon price of 31 euros ($41.92) a tonne (2200 lbs) in 2020. The Center's carbon price is currently $20 per ton (2000 lbs). European Union carbon prices are roughly half what they were in mid-2008, trading around 13.45 euros ($18.35) a tonne. Carbon markets allow polluters to buy and emit carbon dioxide, blamed for global warming. Under such "cap-and-trade" schemes, companies or countries face a carbon limit. If they exceed that limit they can buy allowances from others.

The EU's Emissions Trading Scheme, launched in 2005, is the 27-member bloc's main weapon in fighting greenhouse gas and together with a U.S. scheme, is viewed as a crucial first step toward creating a global market. But cap-and-trade legislation faces stiff opposition from Republicans in the U.S. Senate and strong doubts persist that a bill will pass this year. A new climate change bill could make its debut in the Senate soon in what would likely be the last big effort by Democrats to enact major environmental reforms this year.

Financial market intelligence provider Standard & Poor's (S&P) and carbon analysts Point Carbon are considering jointly developing carbon offset project risk assessment products and services. The companies have signed a memorandum of understanding and will work together to determine how they can leverage their expertise in a global carbon market that could be worth 121 billion euros ($163.6 billion) in 2010, according to Point Carbon. Demand for independent evaluation of the risk of carbon offset projects is growing rapidly around the world. (Reuters, 3/3/10, Reuters, 3/2/10)

No comments: