CCX leads doubling of voluntary market volumes – report

www.environmental-finance.com
London, 21 May

Voluntary carbon markets doubled in size and value in 2008, consistent with the trend in 2007 and in line with earlier predictions, according to a report released yesterday.

Around 123 million voluntary carbon credits - each equivalent to one tonne of carbon dioxide - were traded last year, valued at $708 million, says the State of the Voluntary Carbon Markets 2009 report from NGO Ecosystem Marketplace and analysts New Carbon Finance. This compares with 65 million tonnes (Mt) traded, worth $331 million, in 2007. The average price of credits was $7.34/t in 2008, up 20% on the previous year.

In a break from previous years, growth in volume traded on the Chicago Climate Exchange (CCX) - a voluntary but legally binding market for greenhouse gas emission credits - overtook growth in the over-the-counter (OTC) markets. According to the report, CCX volumes tripled to 69.2 Mt, while OTC volumes rose 26% to 54 Mt.

CCX benefitted hugely from the US political situation as volumes - and prices - surged around Super Tuesday on the 5 February 2008, when it emerged that the leading presidential nominees all backed the use of cap-and-trade to control greenhouse gas emissions. Draft cap-and-trade legislation in Congress was also supportive of CCX volumes, the report says. However, since OTC credits sold for an average 66% premium over CCX credits, the value in the OTC markets was higher - $397 million compared with $307 million.

"Over the past three years, we have witnessed this market grow rapidly in volume and maturity," said Katherine Hamilton, managing director of Ecosystem Marketplace and co-author of the report. "The 2008 markets saw further establishment of offset standards and the initial integration of registries, while continuing to serve as an incubation space for project types not currently accepted in the Kyoto markets."

Just 29% of voluntary carbon transactions were tracked in a third-party registry - a small decline on the 31% tracked in 2007. The report's authors expect "registry usage to increase substantially going forward", particularly since the Voluntary Carbon Standard, which captured almost half of credits verified to a third-party standard in 2008, only launched its registry in March this year.