Carbon Volumes Rocket in 2012, Values Plummet – Bloomberg

Politicians and sceptics have hailed 2012 as the year the global carbon market finally croaked its last.    However the latest report from Bloomberg New Energy Finance paints a more nuanced picture and offers a more positive perspective.

While BNEF’s data shows the absolute value of the global carbon market  transactions plunged 36% last year as European Union prices fell and United Nations emission credits dropped to record lows, transaction volumes across the world grew by 26% in 2012 to reach 10.7bn tonnes – equivalent to a third of the world’s total emissions of CO2.   

The story of 2012 seems to be more hungry mouths fighting over a dwindling pie of value.  With most of the compliance market satisfied, fast moving speculators have spent Q4 in particular trying to cash in on small movements in prices amid political uncertainties and increasing auctions and issuance.  If we accept that the low carbon price is a result of effective abatement within the EU, then the increase in volumes could plausibly be seen as a sign of a healthy carbon market.

BNEF point to greater auctioning in the European ETS in phase 3 as evidence for the prediction of a growth in value from €61bn to €80bn (equivalent to 2010 levels) rising to €96bn in 2014 on the back of the EU backloading proposal being successful.  They are even more bullish on 2015 provided an EU ETS-Australia link up goes ahead.

Amidst all the doomsayers, BNEF have provided an optimistic appraisal of 2012 and a positive outlook for the future global carbon market.  There is little disagreement that a strong and efficient carbon market will  support green growth across the planet.  Now it’s up to the politicians to deliver.

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