Slower cuts in greenhouse gases cloud carbon boom

By Vera Eckert and Michael Szabo

COLOGNE, Germany (Reuters) - The global carbon market more than doubled in value in 2007 to $64 billion, but that masked slow growth in actual greenhouse gas emissions cuts, the World Bank's carbon finance unit said on Wednesday.

Climate change policies which limit the production of planet-heating gases in rich countries are driving booming global demand for emissions permits.

One way industrialized nations can buy carbon offsets is by funding greenhouse gas emissions cuts in developing nations, through a U.N.-led scheme under the Kyoto Protocol, but growth in value is outstripping emissions cuts.

"It would be a shame for the world to lose this momentum now," said Karan Capoor, head of sustainable development for the World Bank and main author of the report.

"At a time that global cooperation to reduce the risk of climate change is more important than ever before, the prospects for developing countries benefiting from the carbon market are in question."

While trade under Kyoto schemes more than doubled to $13.4 billion in 2007, volumes of actual carbon dioxide cuts made by registered projects grew just 7 percent.

The primary market for Kyoto's Clean Development Mechanism (CDM) grew to 551 million tonnes of carbon dioxide equivalent last year from 537 million in 2006.

The slow growth was due mainly to bureaucratic and procedural delays, the report said.