2009 was a tumultuous year for the voluntary carbon markets, according to a new report. Transactions dropped 26% compared to 2008 for an equivalent of 94 million tons of carbon dioxide emissions reductions.
The State of the Voluntary Carbon Market Report issued by
Ecosystem Marketplace and Bloomberg New Energy Finance found the total value of traded credits declined
47% to US$387 million in 2009 and the average price of an emission reduction was $6.5/tCO2e.
Although the economic downturn reduced offset purchasing for corporate social responsibility, the
report notes significant growth in the pre-compliance segment of the voluntary markets. These are
speculative credits bought in anticipation of a cap-and-trade program in the US, which accounted for the
greatest market share of supply (56%) and demand (49%) of voluntary carbon credits in 2009.
Forest Trends’ Ecosystem Marketplace Director and report co-author Katherine Hamilton said,
“Voluntary markets play a critical role in market innovation, and they are becoming more efficient and
transparent as participants forge deeper connections with each other. It is encouraging that even with
the dual hit of regulatory uncertainty and tightened budgets for offsetting in 2009, the industry has
continued to evolve, forming linkages that create a more efficient market infrastructure.”
In May, market operator IntercontinentalExchange (NYSE: ICE) agreed to acquire Climate Exchange plc, which operates the largest voluntary market in the U.S.–the Chicago Climate Exchange.
Bloomberg New Energy Finance Director and report co-author Milo Sjardin, said: “The economic
recession had a marked impact on the part of the market primarily concerned with buying credits to
offset emissions of companies and individuals. In contrast, expectations of a possible US carbon trading
program lifted the importance of the US, which figured as the largest buyer and seller in the market and
the most popular transactions were those that could count towards future compliance. However, with
the current state of play of US politics this situation is likely to be very different this year.”
The survey found a near doubling in the use of independent, third-party “registries,” which track
ownership of offsets so that individual emission reductions are not counted twice. The survey identified
17 registries accounting for 51% of all voluntary offset transactions last year, while just 29% of
transactions were listed with registries in 2008. The survey attributes the growth in registry uptake
largely to the emergence of multiple registries spread across different regions, which issue credits and
track ownership.
The most popular project types were those that destroy methane–a greenhouse gas that traps more
than 20 times as much heat as carbon dioxide. These projects stand a good chance of being
grandfathered into a US compliance scheme, and they accounted for 41% of voluntary offset
transactions in 2009.
Forestry projects were next, at 24%, followed by renewable energy projects, at
17%. The US took the lead from Asia this year as the source of the vast majority of offset credits (56%),
followed by Latin America (16%) and Asia (12%).
The report is free for download at the link below.
Loading...