According to a new report release by New Energy Finance,  the volume of carbon credits bought and sold in the Regional Greenhouse Gas Initiative (RGGI) in the United States matched the entire volume of credits traded on the international carbon market in the second quarter of this year.  The number of carbon credits sold under the CDM in Europe,  in the second quarter of this year, increased by 25% on the first quarter.  However the volume of credited traded on the secondary market decreased by 15% during this period.  Most of this decline was due to reductions in the volume of future contracts, possibly in reaction to the higher volume of European Emission Allowances now on the markets as a result of the economic downturn.  In stark contrasts, the number of carbon credits traded in the Regional Greenhouse Gas Initiative in the Northeast region here in the States, increased by 319% over the first quarter of this year.

To date, the International carbon market has been defined by the Kyoto Protocol, setting out the emission reduction targets they developed countries are required to meet up to 2010.  In Europe, the Kyoto Protocol gave rise to the EU Emissions Trading Scheme, which is now the largest carbon market in the world.  A key part of the Protocol is the ability to trade emissions between countries, and in particular, between developing and developed countries.  This process is known as the Clean Development Mechanism (CDM), which allows emission reduction projects in developing countries, who can use them to meet their emission obligations.

The rapid increase in volumes traded in the RGGI scheme in the Northeast reflects an increased speculative interest in carbon trading in here in the States, ahead of the potential adoption of a federal cap and trade scheme under the Waxman-Market bill.  Because the carbon prices in the CDM market are a lot higher than the prices in the RGGI here, the actual value of the carbon traded in the RGGI scheme considerably less than the Kyoto CDM market. The EU ETS still dominated the world carbon market, and in fact, increase its market share in the second quarter, by 84% over the previous quarter.  The EU ETS continues to command the highest prices of all the carbon markets and trades the most carbon products.

© 2009, Tracey de Morsella. All rights reserved. Do not republish.

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Author: Tracey de Morsella (323 Articles)

Tracey de Morsella started her career working as an editor for US Technology Magazine. She used that experience to launch Delaware Valley Network, a publication for professionals in the Greater Philadelphia area. Years later, she used the contacts and resources she acquired to work in executive search specializing in technical and diversity recruitment. She has conducted recruitment training seminars for Wachovia Bank, the Department of Interior and the US Postal Service. During this time, she also created a diversity portal called The Multicultural Advantage and published the Diversity Recruitment Advertising Toolkit, a directory of recruiting resources for human resources professionals. Her career and recruitment articles have appeared in numerous publications and web portals including Woman Engineer Magazine, Monster.com, About.com Job Search Channel, Workplace Diversity Magazine, Society for Human Resource Management web site, NSBE Engineering Magazine, HR.com, and Human Resource Consultants Association Newsletter. Her work with technology professionals drew her to pursuing training and work in web development, which led to a stint at Merrill Lynch as an Intranet Manager. In March, she decided to combine her technical and career management expertise with her passion for the environment, and with her husband, launched The Green Economy Post, a blog providing green career information and covering the impact of the environment, sustainable building, cleantech and renewable energy on the US economy. Her sustainability articles have appeared on Industrial Maintenance & Plant Operation, Chem.Info,FastCompany and CleanTechies.

  • http://hintonhumancapital.wordpress.com hintonhumancapital

    I am excited to read the activity in the carbon markets has increased. But I wonder what these percentages mean in real money and what other market forces influence the carbon market. For instance, Oil has an inverse relationship with the currency market and oil futures have a direct effect on supply and demand. Will the carbon market have the same influences? What do you think?
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