(adds data on UN markets from paragraph 11)
LONDON Jan 2 The value of global carbon markets
dropped 38 percent to 38.4 billion euros ($52.9 billion) in
2013, as prices slid in the main EU and U.N. schemes and trade
limited in new programmes, analysts at Thomson Reuters Point
Carbon said on Thursday.
The value of carbon permits and credits traded was down from
62 billion euros in 2012 and 96 billion euros in 2011, a
two-year period in which benchmark EU carbon permit prices fell
to 5 euros per tonne from 18 euros, the analysts said
in a a report.
Last year also saw a decrease in volume, with 9.2 billion
emission units changing hands compared to 10.7 billion in 2012,
the first drop in turnover since 2010.
"The main explanation for the falling prices in carbon
markets around the world is the very modest emission reduction
targets adopted for the period up to 2020," Point Carbon's
Anders Nordeng said.
"Without ambitious climate targets there is no need for deep
emission reductions and carbon prices will remain at low
In an effort to curb emissions of heat-trapping gases blamed
for global warming, many governments have set up markets that
cap emissions and allow emitting companies to trade excess
The EU Emissions Trading Scheme (ETS) has operated since
2005 and represented 94 percent of the value and 88 percent of
the traded volume of global carbon markets in 2013, the analysts
Prices in the EU scheme have fallen as rigid supply rules
flooded the market with permits as demand ebbed amid the bloc's
Last month, EU lawmakers agreed to cut supply temporarily in
an attempt to push prices back towards levels that stimulate
companies to invest in carbon-cutting technology. The move
followed more than a year of wrangling amid concerns that higher
prices could hamper the bloc's economic recovery.
The so-called backloading proposal, which delays the sale of
permits from scheduled auctions, is not expected to take effect
until March at the earliest. Analysts say that without further
reform, it will not push prices much higher than 5 euros.
U.N. MARKET COLLAPSE
The Clean Development Mechanism (CDM) and Joint
Implementation (JI), the carbon offset schemes created under the
United Nations, suffered an even greater decline in 2013.
Trade in U.N. credits dropped 96 percent in value and 75
percent in volume to 299 million euros and 742 million units
respectively, the analysts said.
The CDM and JI allow developers of carbon-cutting projects
to earn credits that can sold to governments or companies
seeking to meet emission targets, with some 2.2 billion units
generated since their inception in 2005.
But fresh investment has dried up as credit prices have
crashed 98 percent in five years to less than 50 cents, lower
than the cost of developing the projects.
Additional demand for the U.N. credits has failed to emerge
via fresh government targets and the EU this year banned credits
from new schemes from all but the world's poorest nations in an
effort to get emerging nations such as China, Brazil and Russia
to pay for more of their own emission reductions.
North American carbon markets were the only ones to have
grown in volume and value over 2013.
The fledging market spanning California and Quebec now has
the highest permit prices in the world, at $10.71 per tonne,
said Point Carbon's Olga Chistyakova.
The analysts added that the launch of five of seven planned
carbon markets in China in the second half of 2013 had great
potential to reverse the overall decline in global carbon
markets due to the sheer size of the schemes, which are in
Guangdong, Beijing, Shanghai, Shenzhen and Tianjin.
Nordeng said talks on a global deal to tackle climate change
due to be struck in late 2015 would be a key test on whether
big-emitting countries would set or deepen emission reduction
targets to tackle climate change effectively.
"If the goal to limit global warming to two degrees
(Celsius) shall be met, more dramatic cuts are needed over the
next decades," said Nordeng, referring to a 2010 agreement by
almost 200 nations under the U.N. to limit the rise in global
($1 = 0.7257 euros)
(Reporting by Ben Garside; Editing by Dale Hudson)