In 2014, the value of the globally-traded carbon market will rise by two thirds from 2013 – reaching €64bn, (€39bn in 2013), with volume increasing by 3% to 9.6 Gt CO2e, according to analysis by Thomson Reuters Point Carbon.
Most of this year’s growth by value is expected to come from the 8.3 Gt EU Allowances (EUAs) that will change hands. This 3% volume increase (up from 8 Gt last year) will produce value growth of 70%; generating both the largest volumes and value globally. Emil Dimantchev, analyst at Thomson Reuters Point Carbon, anticipates that such significant growth will be driven by “expectations that after imminent backloading is implemented early in 2014, EUA prices could rise to €7.5/t, increasing over-the-counter and exchange traded liquidity. This would lead to an astounding increase in value, up by more than two thirds to €61bn from €36bn in 2013”.
He added that even though the volume growth is minimal year-on-year, and the auction volume will actually decrease as a result of backloading, market confidence is expected to improve so much that it would drive the EUA price up by 35% per tonne – an increase substantial enough to create a surge in the EU ETS value without a correspondingly large increase in volume.
The outlook for the two regional North American markets – the Western Climate Initiative (WCI) and the Regional Greenhouse Gas Initiative (RGGI) – is that together they will create the second largest carbon market by value for the second year in a row.
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