World Bank launched its 2005 report on the carbon market. The report, which was also sponsored by IETA (International Emissions Trading Association), stated that approximately 107 million tonnes of CO2 equivalent were traded via projects last year. The World Bank estimates that the volume has already reached around 43 million tonnes in the first four months of 2005. According to the World Bank, this is the extent to which rich industrial countries have taken advantage of the opportunity to invest in greenhouse gas emissions reductions in developing countries and countries in transition. The World Bank expects that trading volumes could well reach several hundred million tonnes of CO2 as early as 2006.
At present, the European Union is playing a pivotal role in driving the market forward, the World Bank stated. According to the report volumes exchanged on these allowance markets has increased dramatically compared with last year, and is now comparable to the volumes exchanged through project-based transactions. The total amount exchanged on all the allowance markets from January 2004 to March 2005 was about 56 million tons CO2 equivalent. This is mostly driven by the entry into force of the EU-ETS in January 2005. Volumes traded from January to March are already 3.5 times higher as the total volumes of European Union allowances exchanged in the whole year 2004.
Source: Carbon Expo
The Emissions Trading Scheme (ETS) is the EU's flagship instrument to fight climate change and meet its Kyoto pledge to reduce emissions of global warming gases by 8% by 2012. A CO2 cap is set for each plant covered by the scheme. Pollution credits can be exchanged on an EU-wide carbon market. Carbon prices dropped by more than 50% last week upon reports that the Czech Republic, Estonia, France, the Netherlands and the Walloon region emitted far less CO2 last year than initially anticipated by the market. With falling prices, incentives for companies to cut down their emissions and free up extra credits are consequently diminished.Image: NASA