Carbon Market Value Dropped 36% in 2012 as Permits Declined

Jan. 3 (Bloomberg) — The value of global carbon market transactions plunged 36 percent last year as European Union permit prices fell and United Nations emission credits dropped to records, according to Bloomberg New Energy Finance.

The market’s value declined to 61 billion euros ($80 billion) from 95 billion euros in 2011, New Energy Finance said today in an e-mailed statement. The value of UN offset trading decreased 64 percent to 6 billion euros. Total trading volume jumped 26 percent to 10.7 billion metric tons, equivalent to a third of the world’s total carbon-dioxide emissions.

The market’s worth will be 80 billion euros this year, assuming the EU has some success in fixing a glut of permit supply in the bloc and boosting prices, according to New Energy Finance. While the European Commission proposal to withhold supply may not be implemented this year, agreeing the plan will probably be enough to prompt a recovery in prices, according to Guy Turner, director of commodities at New Energy Finance.

“That will provide confidence in the market that’s been lacking,” he said today by telephone from London.

The commission in Brussels, the EU market’s regulator, proposed in November to temporarily delay the sale of 900 million tons of carbon permits through 2015 in a process known as backloading. The supply would return later in the decade under the plan.

The backloading plan probably won’t be agreed by EU nations because it will be seen as a regulatory intervention that reduces investor confidence in the market, Daniel Rossetto, managing director of Climate Mundial Ltd., a London-based consulting company that works in carbon markets, said today by e-mail. That will delay a price rebound, he said.

The value of transactions in the bloc’s market dropped 24 percent last year to 54 billion euros, according to New Energy Finance. Average global prices will jump about 15 percent to 6.60 euros a ton this year, the researcher said.

A year ago, New Energy Finance predicted the value of the global carbon market would advance 9.8 percent in 2012.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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