In 2009 the total US offset market transacted 19.4 million tons (Mt) of carbon dioxide equivalent (CO2e) worth $74 million, according to a new market report.
In "US Offset Markets in 2010: The Road Not Yet Taken," analyst group Point Carbon describes a growing and surprisingly mature market, even as volumes
have been held back by policy uncertainty. The supply of reductions in
2009 reached an all time high of 29 million tons (Mt) of CO2e,
reflecting a 13% increase from 2008. Of those credits, many were
moving towards certification by the Climate Action Reserve, a
North American offset standard and registry, which accounted for 65% of the traded value in the 2009 US offset market.
Carbon funds and aggregators provided leadership by purchasing 39% of all credits in the primary market, followed closely by financial intermediaries and emitters, which accounted for in 30% and 25% of trades respectively. The market is still dominated by over-the-counter transactions, which represent 63% of the market.
Compliance eligibility drove the market, as buyers looking to purchase credits for use in future cap-and-trade schemes traded $48 million in 2009, 65% of the total.
"The growth we are seeing has been driven by forward-thinking investors and developers, who either hope to hedge policy risk by buying early or capitalize on a new expanding market. However, until federal cap-and-trade passes, fundamental demand from emitters will continue to be constrained. We forecast tremendous growth in 2010 if this legislation is indeed passed," said Justin Felt, author of the report.
Once allowance markets such as the Regional Greenhouse Gas Initiative (RGGI) are included, the size of the US carbon market expands to $2.7 billion with 841 Mt CO2e trading hands. As US Offset Markets in 2010 outlines, once a compliance scheme is in place, volumes and values will rise exponentially for carbon markets, including offsets.
In Related News…
U.S. Senators Lindsey O. Graham (R-SC), John F. Kerry (D-MA) and Joseph I. Lieberman (I-CT) have worked for months to develop an alternative to cap-and-trade, which the House approved eight months ago. They plan to introduce legislation shortly that would apply different carbon controls to three major sources of emissions: electric utilities, transportation and industry.
Read Washington Post coverage at the link below.
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