The world’s carbon markets are estimated to rise in value by two-thirds this year to €64 billion (US$87.5 billion), posting the first growth seen since 2011.
Analysts at Thomson Reuters Point Carbon, who said the rise would be led by a jump in the European Union carbon price, have provided the outlook.
The rise will be mainly fuelled by a jump in European carbon prices triggered by market intervention efforts, the analysts said.
They added that traded volumes in the EU’s Emissions Trading System (ETS) were expected to climb to 8.3 billion tonnes this year from 8 billion in 2013.
In a bid to prop up depressed carbon prices which finished 2013 at €4.95-tonne EU politicians will withdraw 900 million units from the ETS between 2014 and 2016, under a plan that is due to start next month.
“EUA prices could rise to €7.50/tonne, increasing over-the-counter and exchange-traded liquidity,” said Point Carbon analyst Emil Dimantchev.
He added that this could increase the value of the EU ETS the world’s largest carbon market to €61 billion in 2014 and from €36 billion last year.
Global trading volumes are also expected to rise by three per cent to 9.6 billion tonnes of carbon dioxide equivalent this year, 10.3 billion in 2015 and 10.9bn in 2016.
The analysts said North America’s two largest regional schemes the Western Climate Initiative and the Regional Greenhouse Gas Initiative, were forecast to grow in value by 22 per cent to a combined €2.7 billion.
However, the United Nations’ main carbon market the Clean Development Mechanism will fall to €236 million from €275 million, as rich countries continue to show little appetite for the program’s credits.
Point Carbon’s Olga Chistyakova said North America’s carbon trading systems are set to overtake the CDM in 2015 and become the world’s second largest market by both volume and value.
This would occur amid a widening of the scheme’s coverage to include emissions from transportation and other fuels.
Meanwhile, China’s seven provincial emissions trading pilot (ETS) schemes could seize the emerging market spotlight from South Korea, where preparations are far from over for its national ETS launch in 2015.
The Chinese schemes could see total volumes top 24 million tonnes this year, before growing tenfold to around 227 million tonnes in 2015, the analysts added.
Carbon prices in markets worldwide have crashed in the past few years due to a chronic oversupply of permits fuelled by the global economic slowdown and a lack of political will to commit to reducing greenhouse gas emissions.
