Carbon market worth up to $118 bln in 2008-report

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LONDON, Jan 8 (Reuters) - The global carbon market was worth around $118 billion in 2008, rising 84 percent from the previous year due to higher trading volumes and prices, research group New Carbon Finance said.

 The market’s value should swell to $150 billion in 2009, in spite of the gloomy backdrop of a global recession, the group forecast in a quarterly trading update.

“For 2009, we anticipate continued market growth albeit at a slower rate than that seen between 2007 and 2008,” it said.

The price of carbon permits called European allowances (EUAs) fell to around 15 euros ($20.46) a tonne in late 2008, halving a two-year high hit that summer.

Lower industrial output, a flood of emissions permits to the market, strong selling to generate cash in the financial crisis and falling oil prices all contributed to carbon’s decline.

Analysts polled by Reuters in December forecast EUA prices at between 13 and 20 euros in 2009 [ID:nLI493072].

New Carbon Finance forecast moderate growth in the EUA market in 2009, but increased liquidity in secondary certified emissions reductions (CERs), carbon offsets under Kyoto’s clean development mechanism (CDM) which are directly linked to investments in clean energy projects.

CER issuances should grow and the registries which transfer will be improved, it said.

“The future of the CDM also looks more secure following the international negotiations in Poznan in December 2008 with firm commitments to improving the transparency and efficiency of the mechanism,” said the group.

New Carbon Finance based its forecasts on future price predictions and permit allocations in the European, North American, Australian carbon markets as well as project-based markets such as spot trades, swaps, options and futures.

For additional news and analysis on the global carbon markets, go to here (Reporting by Nina Chestney; Editing by James Jukwey)