No carbon market boom without U.S.: delegates

LONDON (Reuters) - The global carbon market will not be worth $1-2 trillion a year by 2020 if the United States does not speed up efforts for a federal emissions trading scheme, delegates warned at a carbon conference in London on Monday.

The sun reflects on downtown skyscrapers as it sets through the Los Angeles smog and haze, October 22, 2006. REUTERS/Lucy Nicholson

“There will be, I’m afraid, no real expansion of the carbon markets to their global potential without movement in the U.S.,” said Henry Derwent, chief executive and president of the International Emissions Trading Association.

“Until someone explains to them (the U.S.) how wrong they are, we will be stuck with a comfortable living in the European market but nothing, nothing near the potential we should be earning,” he added.

Some expect the $144 billion global carbon market to grow to $1-2 trillion a year by 2020, as demand for carbon credits increases after 2012 when the U.N.’s Kyoto Protocol is due to expire.

However, the global market’s value fell by 9 percent in the third quarter this year to $28 billion, compared to $31 billion in the same quarter last year, research by Bloomberg New Energy Finance showed on Monday.

Declining trading activity was mostly due to the lack of clarity on global climate policy and the absence of a federal emissions trading scheme in the United States.

The European Union’s Emissions Trading Scheme (EU ETS) is still the driver of the global market, showing an 8 percent increase in trading activity in the third quarter from a year earlier, the report said.

“We need more participation, particularly U.S. participation in carbon markets,” said Alex Bowen, principal research fellow at the London School of Economics and Political Science.

A federal U.S. scheme was narrowly approved in the House of Representatives last year but did not gain enough support to pass through the Senate in 2010.

“There isn’t enough in the U.S. of those two commodities that Washington understands -- money and angry voters,” Derwent said.

Fossil fuel companies and industry associations spent $532 million on lobbying over 18 months in the lead up to a climate change bill being debated in the Senate, Derwent said.

“There are not enough angry voters. The numbers are not enough for senators or congressman to think it’s worth taking political flak over,” he added.

Editing by William Hardy