FOR IMMEDIATE RELEASE Wednesday 11 January 2012
CONTACT Guy Turner Bloomberg New Energy Finance +44 20 3216 4086 [email protected]
GLOBAL CARBON MARKET EXPANDS 10% IN 2011 Analysis from Bloomberg New Energy Finance shows that in spite of a poor last quarter to the year, the value of the world's carbon markets expanded by 10% in 2011
London, January 10, 2012 – According to analysis by Bloomberg New Energy Finance, the value of the world carbon market increased to €92bn in 2011, a rise of 10% on €84bn in 2010. The main cause of this increase is additional market activity, with the volume of carbon changing hands increasing by 22% from 2010 to 2011. In 2011, some 8.2 billion tonnes (bnt) of carbon dioxide allowances were traded compared to 6.7bnt in 2010.
The robust trading activity has in part been driven by increased volatility in the European market as traders have started to switch their attention from energy fundamentals to news and rumours about the future of the Eurozone. The 60‐day volatility in the EUA December 2012 contract nearly doubled from around 40% in October to 70% at the end of December.
The latter half of 2011 also saw a notable increase in the trading of international carbon credits, including Certified Emission Reductions (CERs), Emission Reduction Units (ERUs) and Assigned Amount Units (AAUs) created under the Kyoto Protocol. An estimated 643Mt of CERs, ERUs and AAUs changed hands in Q4 2011 – more than twice as much as in Q2 and an increase of 27% compared with Q3. This increased activity was driven by high issuances of CERs, a spike in ERU trading as Ukrainian ERUs were sold before the ban on that nation’s ERU and AAU trading, and high transaction volumes on secondary markets as prices declined to record lows.
The increase in traded volume across all markets was more than enough to offset a decline in the global weighted average price of carbon allowances, which fell by 10% from €12.4 in 2010 to €11.2 in 2011. The average price of European allowances over the year declined by 9% between 2010 and 2011,falling from €14.8/t to €13.4/t, while international carbon credits, or Certified Emission Reductions (CERs), reduced in price by 17% from €12.1/t to €10/t. See Figure 1.
The gradual decline in average prices in 2011 is in sharp contrast to the increase in traded volume, which rose steadily throughout the year from 1.8bnt in Q1 to 2.4bnt in Q4 – an increase of 33%. This jump in trading activity was seen across both the European and international carbon credit markets (Figure 2).
Bloomberg New Energy Finance expects the global carbon market to increase in value by a further 10% in 2012 as a result of greater use of auctioning in the EU Emissions Trading System (Figure 3).
Guy Turner, director of carbon and power research at Bloomberg New Energy Finance, commented, "We previously warned that excessive volatility in carbon prices could drive traders out of the market. Evidence however is that this hasn't happened so far, in fact traders have been more active than ever! With the advent of more auctioning in the European scheme in 2012 we expect the value of the carbon market to increase again in 2012.”
Figure 1: Historical prices (€/tCO2e)
20
18 Dec-11 EUA 16
14
12
10 Dec-11 CER 8
6
4
2 Spread 0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 2010 2011 Figure 2 Quarterly traded volumes for main carbon markets, Q1 2009Q4 2011 (Mt)
2,500 2,382 2,189 2,243 1,992 2,000 1,883 1,819 1,799 1,666 1,566 1,555 1,531 1,470 1,500
1,000
500
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 EUA sCER pCER AAUs ERU Others
Figure 3. Carbon market value (€bn)
140 +10%
120 +10% +13% 101 +5% 100 92 +27% 84 80 80 +211
63 60
40 +106 +217 20 20 10 3 0 2005 2006 2007 2008 2009 2010 2011 2012 Others EUA sCER pCER AAUs Forecast Source: Trading figures taken from Bloomberg, ECX, Bluenext, EEX, CCX, Nordpool, other sources include UNFCCC and our own Bloomberg New Energy Finance estimations.”Others” includes RGGI and NSW GGAS. Annual change in total transacted volumes (Mt)
2010 2011 Change % change EU ETS Exchange traded 3,282 4,094 812 25% OTC, cleared across 2,191 2,310 120 5% exchange Total EU ETS 5,473 6,405 932 17% sCERs Exchange traded 392 483 91 23% OTC, cleared across 606 925 319 53% exchange ERUs 4 61 57 1371% Total sCERs & ERUs 1,001 1,469 468 47% pCERs 187 309 122 65% AAUs 29 35 6 21% Total CER market 1,217 1,813 596 49% Others 55 26 -29 -53% Total 6,745 8,244 1,499 22% Source: Bloomberg New Energy Finance
Annual change in total transacted values (€/bn)
2010 2011 Change % change EU ETS Exchange traded 48 54 6 12% OTC, cleared across 22 22 0 1% exchange Total EU ETS 70 77 6 9% sCERs Exchange traded 5 4 -0 -10% OTC, cleared across 7 8 1 21% exchange ERUs 0.05 0.45 0 838% Total sCERs & ERUs 11 13 1 11% pCERs 2 3 1 61% AAUs 0.2 0.2 -0 -1% Total CER market 13 16 2 17% Others 0 0 -0 -15% Total 84 92 8 10% Source: Bloomberg New Energy Finance
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