EU carbon price may rise

Citation

(2007), "EU carbon price may rise", Management of Environmental Quality, Vol. 18 No. 5. https://doi.org/10.1108/meq.2007.08318eab.003

EU carbon price may rise

The price of carbon emission allowances will be at least €12 per tonne in the 2008-2012 second phase of the EU’s emission trading scheme (ETS), the World Bank has predicted in its annual report on the state of the global carbon market. The bank forecast a shortage of carbon allowances of between 0.9 billion to 1.5 billion tonnes during phase two of the ETS. The price of allowances for the first phase the scheme, which ends this year, has collapsed to under one euro. The value of the global carbon market tripled in size last year to reach US$30 billion (€22 billion), the report says. Volumes traded rose from 710 million in 2005 to 1.6 billion tonnes in 2006.

As in previous years, the market was dominated by the European emission trading scheme (EU ETS), which at US$24 billion accounted for over 80 per cent of the total value. It transacted 1.1 billion tonnes of carbon in 2006. The market in the Kyoto protocol’s flexible mechanisms also doubled in size to US$4.8 billion, trading 450 million tonnes.

In 2006, nearly 90 per cent of the Kyoto flexible mechanism market was made up of Clean Development (CDM) projects. These fund emission reductions in developing countries. The report notes that US$8 billion invested since 2002 has generated an additional US$16 billion in clean energy investments in these countries since that time.