POZNAN, Poland (AFP) – The world market in greenhouse gases was worth 38 billion euros (48.26 billion dollars) in the first half of 2008, an increase of 41 percent over the figure for the same period in 2007, the UN climate conference heard on Wednesday.
The estimate, published by the International Emissions Trading Association (IETA), highlighted a fast-growing industry which is expected to expand even further if the United States establishes a national carbon market under Barack Obama.
A total volume of 1.84 billion tonnes of carbon dioxide (CO2) -- the principal greenhouse gas -- or its equivalent were traded in the first six months of the year, an increase of 56 percent over the figure for the first half in 2007, when the tally was 1.2 billion tonnes.
"These volume and value numbers suggest a weighted average world carbon price of 20.61 euros per tonne" of CO2 or its equivalent, according to the estimates, compiled by the Oslo-based analyst Point Carbon.
The European Union's Emissions Trade System (ETS), established under the UN's Kyoto Protocol, accounts for the lion's share of trade -- 70 percent of all global volume in the first half of 2008, as against 61 percent in all of 2007.
"While the EU ETS retains the largest share of the world carbon market, we may expect the fastest growth to take place elsewhere," the report, Greenhouse Gas Market 2008, noted.
The world carbon market took off in 2005, when the Kyoto Protocol took effect, although small schemes had been started on a pilot basis several years before. In 2003, world trade was just 70 million tonnes.
Under Kyoto, rich countries are required to curb their emissions as compared to a 1990 benchmark. There is a five-year evaluation period, from 2008-2012, for assessing whether they reach their target.
To help economies meet this objective, the treaty enables several mechanisms that harness market forces.
One is emissions trading. Under the ETS, big-polluting EU corporations have been set individual emissions targets or else pay a penalty for every tonne over this limit.
Companies that succeed in emitting less than their cap can sell the surplus to others that are over their cap. The idea is to provide a financial stimulus to everyone to clean up their act.
The other Kyoto incentives are the Clean Development Mechanism (CDM) and Joint Implementation (JI), under which a company can gain carbon "credits" for emissions-reducing schemes in developing countries (under the CDM) or former Eastern Bloc countries (the JI). These credits can be traded in the marketplace.
Outside the EU, the other significant markets in carbon emissions are at regional level, IETA said.
They are the New South Wales Greenhouse Gas Abatement Scheme (NSW GGAS) in southeastern Australia and the Alberta provincial emissions trading system in Canada.
However, a slew of countries are expected to launch their own national system in the coming years, although it is unclear so far as to how these might connect up with the EU ETS.
Prospective entrants include Australia, with a federal ETS from 2010, Japan, New Zealand and the United States.
President-elect Obama has set a goal of reducing US emissions to 1990 levels by 2020 and by 80 percent by 2050, using a cap-and-trade system and a 10-year programme worth 150 billion dollars in renewable energy.
The talks in Poznan, running from December 1-12, gather the 192-member UN Framework Convention on Climate Change (UNFCCC), tasked with furthering efforts to build a new climate pact beyond 2012.