- 19th August 2010
- Comments (10)
The latest report from the World Bank on the global carbon market has revealed that it grew by some six per cent in 2009 to be worth $144 billion, despite enduring its most challenging year to date. This impressive performance comes against a backdrop of the global recession, in which both demand for carbon assets and supply of new projects reduced due to economic pressure and a lack of available capital.
So, if an industry can grow by six per cent when demand for its products (carbon assets) is falling as industrial output is plummeting and investment in new supply is stalling, is it a virtually recession-proof industry? Time will tell, of course, and the next report into the global carbon market will show to what extent the world markets have recovered. However, if an industry is able to grow at a time when the vast majority of the countries which are investors in it are in the deepest recession for more than 60 years, the possibilities for growth when global economies pick up is huge.
In fact, much of the current carbon market is for future needs for carbon credits. The report’s co-authors have outlined a need for clear policies and regulatory systems in the future to ensure continued growth and development of the carbon markets. Trends for future years include the development of more national mitigation efforts in order for individual countries to show their commitment to energy trading scheme, as well as developing new initiatives for climate finance solutions.
Demand for carbon credits will change again when the current Kyoto Protocol expires in 2012. The report outlines how with the weakening demand for pre-2013 offsets and the lack of traction on the post-2012 front, the residual demand for Kyoto assets could reach 230 million tons by 2012. A large share of the demand for offsets under the EU Climate and Energy Package remains to be contracted, thus theoretically sustaining future demand and prices.
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