EMISSIONS TRADING TO DOUBLE

Trading is a way of pricing the “externalities” of emissions, the harm to the general welfare done when a company or business emits health-endangering or environment-eroding pollution. Like the fellows who wrote the preamble to the US Constitution said, government is to “provide for the common defense” as well as to “promote the general welfare.”

World carbon market seen doubling this year: IETA
Annika Breidthart, November 5, 2007 (Reuters)

WHO
International Emissions Trading Association (IETA) (Andrei Marcu, president);

WHAT
Marcu expects the emissions trading market to grow to $60 billion in 2007. Certified Emissions Reductions (CERs) are currently trading at approximately 17 euros/ton of carbon equivalent.

More than half the money spent on CERs goes to finance New Energy. (click to enlarge)

WHEN
The $60 billion figure represents a doubling of the $30 billion market value in 2006.
And that was triple the 2005 value of $11 billion.

WHERE
- The majority of emissions trading is in the European Union's Emissions Trading Scheme (ETS).

WHY
- Trading is via the purchase and sale of EU ETS emissions allocations or CERs. Under the Kyoto Protocol’s Clean Development Mechanism (CDM), administered by the UN, programs that can be certified to reduce emissions. Over half are New Energy developments. Other projects include reforestation, chemicals control, waste capture, emissions capture, transport reduction, etc.
- EU ETS-issued allowances are traded between businesses and industries in the EU, those who can operate below their allocated emissions limits selling to those who must go over.
- UN CDM CERs can be purchased if an over-polluting business or company prefers sees a better value in doing so.
- There are also a number of voluntary trading markets such as the Chicago Climate Exchange.
- Trading companies, like brokerages, are emerging in countries all over the world.
- Certification specialists are emerging in support of voluntary markets.

And over half the CERs go to China and India. From the 2 graphs, it is clear a lot of CER money goes to finance emission-free energy in places where emission-free energy is especially vital. (click to enlarge)

QUOTES
- Marcu: "One key trend you will see for 2007 is that the credit market will be taking up an even larger percentage of the total market but you'll still see the dominant single market being the European market…"
- Lee Solsbery, IETA board member: "The types of projects you have, the geography of projects, the diversity, the replicability of early projects…all those things that you want to see in a market taking off, is where that figure comes from…"