The global supply of carbon offsets could swamp demand in the years ahead, according to a report to be published by Britain’s Carbon Trust next month.
Reuters reported that unless countries like the United States, Japan and Australia increase demand by adopting cap-and-trade programs, the price of carbon offsets could decline to the extent that the European Union’s Emissions Trading Scheme (ETS) will fail to effectively reduce greenhouse gas emissions.
The Carbon Trust report estimates that under current trends the total global supply of carbon offsets from 2013-2020 will exceed 10 billion tonnes of avoided carbon dioxide emissions–compared with a quota of EU carbon permits of 14.8 billion tonnes over the same period.
Last week, the ETS held its first auction of carbon dioxide permits.
The U.K. government reportedly raised about $81 million from sales of 4
million permits. Previously the ETS gave away set numbers of carbon permits to businesses.
EU member states are currently in the process of reorganizing their ETS, which is the cornerstone of European climate policy.
U.S. president-elect Obama has said he will push for the adoption of a cap-and-trade system.
Australia is developing a carbon trading scheme to launch in July 2010.
The future of New Zealand’s carbon market is now uncertain, as the newly elected conservative government said it intends to review plans for the system, which was poised to begin in just weeks. Environmentalists fear the new government could weaken the system put in place by the previous administration.
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