Global Carbon Trading Grows In Volume

Though the volume of trade grew by 68 percent over 2008, the financial crisis caused prices of credits to tumble said Norwegian-based Point Carbon.

AMSTERDAM (AP) -- The global trade in carbon emissions credits expanded last year, with a regional cap-and-trade market in the northeastern U.S. and Canada taking a growing share, a market analysis company reported Wednesday.

Though the volume of trade grew by 68 percent over 2008, the financial crisis caused prices of credits to tumble, and the amount of money that exchanged hands rose by just euro2 billion ($2.87 billion) to euro94 billion ($135 billion), said Norwegian-based Point Carbon.

An analysis of the trade, which is concentrated in Europe, has significance for the U.S. Congress, which is considering a federal cap-and-trade system under President Barack Obama's climate and energy plan, and for several other countries seeking ways to control greenhouse gas emissions.

Under the scheme, companies are given a pollution allowance, an amount of greenhouse gases they can emit without penalty. If they emit more than allowed they must buy credits from a company that emits less than permitted and has a surplus to sell.

Most trading is done in Europe, but the fastest-growing market last year was in the 12 U.S. states and Canadian provinces participating in a carbon trading scheme, Point Carbon said.

Carbon traders had been looking to the Copenhagen climate change summit last month for clear signals from all industrial countries about how much they intended to cut greenhouse gas emissions over the next decade. But the conference ended inconclusively, with an agreement that fell short of binding nations legally to their announced targets.

Endre Tvinnereim, Point Carbon's senior analyst, said a stronger agreement at Copenhagen would have prompted the 27-nation European Union to accept deeper emissions cuts, which likely would have affected carbon prices.

Tvinnereim said the global financial crisis caused a slowdown in industry and in carbon emissions, meaning many companies used fewer credits than they were allotted and had more to sell.

Some troubled companies used their carbon allowances as collateral for loans or cashed them out when they went out of business, he said. "You were actually seeing quite a lot of selling of carbon just to stay afloat," he told The Associated Press.

The average price for a ton of carbon this year in Europe fell to euro11.40 from the 2008 average of euro18.87.

Under the European Trading Scheme, most allowances are given free to companies and installations by their countries, which are allocated national allowances by the European Commission. Some 12,000 power plants, steel mills, chemical foundries and other factories fall under the mandatory scheme.

Point Carbon said 8.2 gigatons of carbon dioxide were bought and sold in 2009. More than three-fourths, or 5.6 gigatons, were sold on the European market. Trade in the Regional Greenhouse Gas Initiative, launched in North America in 2005 grew 10 times over 2008 but still amounted to less than one gigaton.

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