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Towards a truly global market
TO THE POINT
This report was published at Point Carbon’s 3rd annual conference, Carbon Market Insights 2006 inCopenhagen 28 February - 2 March 2006. For more information, see www.pointcarbon.com
28 February 2006
The world’s largest ever carbon market survey
More than 800 participants in our web-survey and 67 in-depthinterviews, combined with Point Carbon’s proprietary databases and market intelligence services, makesthis the most comprehensive carbon market report to date.
Global carbon market transactions worth €9.4 billion in 2005.
The EU ETS did an estimated 362 Mt CO2, at anestimated ﬁnancial value of €7.2 billion. 93% of the volumes in the project market came through CDM, at397 Mt CO2e, €1.9 billion. JI did 28 Mt, €95 million.
China is largest CDM seller.
More than 70% of CDM volumes came from a few large HFC-23 reductionprojects in China. There are also several projects in India and Brazil.
CDM buy side is dominated by private sector.
riven by high EU ETS prices together with an increasingnumber of carbon funds.
Japan enters market in earnest.
The European private sector activity will continue to dominate the market,but Japanese public and private sector will add further to demand for project credits in 2006. Canada isconspicuous by its absence from the market.
The EU ETS is a qualiﬁed success.
The weekly turnover in EU ETS has been increasing steadily. The marketis reacting to fundamentals, although policy (non-)decisions also still constitute a price driver. 45% ofsurvey respondents found the EU ETS to be a success.
CDM/JI still has some way to go.
Only 7% of survey respondents ﬁnd the project market to be mature, andonly 22% ﬁnd them to be a success.
The cost of carbon cannot fully explain the increase in power prices.
Increasing fuel prices, increaseddemand, as well as generators’ strategies have also contributed to power price increases. The impact ofcarbon costs on power prices, and vice versa, has created new interplays between energy commoditiesnd strengthened energy market interactions.
Market is still best option for world to make transition to low-carbon economy.
Unlike technology-basedlternatives, the carbon market places a cost on emissions and a value on reductions, and leads to largescale reductions in the near term.