Oslo, 7 July 2010

The markets for European Union Allowances (EUAs) and certified emissions reductions (CERs) exchanged 3.7 billion tonnes (Gt) CO2e over the six first months of 2010, valued at some €48 billion (US$59bn), compared to €46bn in H1 2009. In terms of volume this is down 10% on the same period last year, mainly due to dramatic reductions in the volumes transacted within the North American Regional Greenhouse Gas Initiative (RGGI) market. In terms of value, however, it represents a 5% increase compared to the same period last year, according to analysis by Point Carbon, the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets. Point Carbon is a Thomson Reuters company.

The EU’s emissions trading scheme (ETS) remained the largest segment of the global carbon market, with a total of 2.9 Gt CO2e exchanged during the first half of 2010, down 7% on the same period last year. The estimated value of the EUA transactions was €40bn in H1 2010, up 2% on the same period last year. Exchanges over the first six months of 2010 consolidated their dominance of the EUA market, taking 64% of the total EUA volume.

The second-largest segment globally was the Clean Development Mechanism ( CDM) market, which includes the primary and secondary market for CERs. The estimated market volume was 675 Mt CO2e, worth around €8bn in H1 2010. This was up 19% in volume terms and 47% in value terms compared to H1 2009.

“Despite the overall reduction in the volume of carbon traded during the first six months of this year, the value of the transactions still increased, due to higher carbon prices, indicating that global carbon markets as a whole continue to perform well despite the global downturn”, said Endre Tvinnereim, Senior Analyst and author of the analysis.

The first six months of 2010 saw an increase in average global carbon prices, to €12.97/t (US$15.86), compared to €11.16/tonne in H1 2009. The weighted-average EUA price was €13.80/t, up from €12.89/t for all of 2009. Secondary CERs over the same six-month period were seen at a weighted average of €12.36/t.

However, in North America, the picture is much more gloomy. The RGGI market during the first six months of 2010 saw a precipitous decline in transacted volume and value. Volume was down two-thirds on the same period last year, from 321 metric tonnes (Mt) to 110 Mt, worth some US$237m (€194m) in H1 2010, down 77% on H1 2009. Tvinnereim attributes much of this decline to “a collapse of the secondary market and a significant fall in prices due to the fact that the scheme is very over-supplied, and prospects that RGGI allowances will be convertible in a federal US ETS are fading as the likelihood of a federal programme has declined over the past year”.

Despite this collapse, however, Tvinnereim concludes that; “comparing the first half of 2010 with the first half of last year, the main picture is one of stability. In price terms, the year so far has been much more placid than the first half of 2009 and the EU ETS market has normalised somewhat after the steep fall in industrial production caused by the financial crisis in 2009. Still, political uncertainty prevails across markets, although the momentum that was lost in Copenhagen is slowly returning. The players in the carbon market are still waiting for one or more critical policy decisions that could bring the carbon market to the next stage”.

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