Carbon finance remains an important tool for encouraging countries to consider a lower carbon development path, the World Bank said, citing the findings of its latest report on the state of the global carbon market.
The global carbon market grew by 6 percent in 2009 despite the negative impacts of last year’s crisis on both the market’s demand and supply side, according to the State and Trends of the Carbon Market 2010 report, which was released May 26 at the Carbon Expo 2010 in Cologne, Germany.
The market reached a total value of USD144 billion last year even as it experienced its “most challenging year to date,” the report says.
Demand for carbon assets in 2009 suffered due to the decline in industrial output and supply because financial institutions shifted from risky investments toward safer markets and assets, the report states. It adds that project developers experienced difficulty in securing finance, which caused a freeze in the number of new projects in the market.
The European Union Emissions Trading Scheme, or EU ETS, was the main engine of the market in 2009, transacting a total value of USD118 billion. The Assigned Amount Unit market also grew, reaching USD2 billion in 2009. This was a sevenfold increase from its value in 2008, the World Bank report says.
The United Nations Clean Development Mechanism, or CDM, meanwhile, declined by 59 percent to a total 2009 value of USD2.7 billion.
CDM officials, however, are eager to show that they can deliver a tenfold increase in their credits, Bloomberg reports.
“Some people believe you can’t run a market under UN bureaucrats,” said Hugh Sealy, a board member of CDM. “We’ve been doing it.”
Gareth Phillips urged the CDM executive board to focus more on projects in the world’s poorest countries. The U.N. should also develop a new process to produce carbon credits in bigger volumes, the chief climate change officer of Sindicatum Carbon Capital added.
