Pollution: Value of global carbon trading is already nearly double last year's figure at £30bn

Mark Milner, industrial editor
The Guardian,
Wednesday July 9, 2008

The value of carbon traded on the world's markets reached €38bn (£30bn) in the first half of this year, almost double the total for the whole of 2007, according to the market analysis and consulting group, Point Carbon.
The world's trade in CO2 was dominated by the EU's emissions trading scheme (ETS), which has accounted for 70% of all trades so far this year and which will grow further after the inclusion of aviation emissions from 2012, according to the report.
The ETS, which covers a series of industrial sectors, sets limits on the amount of CO2 that companies covered by the scheme can emit. Any permits they do not use can be sold, while companies which overrun their allotment have to buy permits to cover the excess. In the first half of the year trades within the ETS hit €30bn, up 161% on the first six months of 2007, according to Point Carbon.
Initially the ETS came in for heavy criticism because allocations were perceived to be too high, allowing companies to meet their targets too easily. The European commission has since tightened the rules, with further changes in the pipeline.
Point Carbon said that although the ETS increased its share of the global market in carbon trades, other markets in the US, Canada and Australia were developing.
Endre Tvinnereim, a senior Point Carbon analyst, said despite its short comings, the Kyoto Protocol was driving the development of the global market.
"The market is no longer immature and precocious, but rather advancing, geographically and in terms of financial sophistication. Unlike other sectors hit by a global downturn this year, the carbon market is in rude health,"
Point Carbon said the increase in the value of carbon changing hands through the market was the result of a series of factors, including an increase in price from €13.36 a tonne in the first half of 2007, to €20.61 in the first six months of this year.
Overall 1.8bn tonnes were traded in the six months to the end of June and the total for the full year is forecast to reach 4.2bn tonnes. Last year traded carbon contracts amounted to 2.7bn tonnes, while in 2003 it was 28m tonnes.
Point Carbon argued that the American presidential election would usher in a new era of American engagement in international climate negotiations, with both presidential candidates supporting a national cap and trade system for CO2 emissions.