The climate conference in Durban in December 2011 agreed to start a process for a post-Kyoto agreement on emissions reductions. The negotiations in Bonn in the last two weeks did make some progress on the issue, at a snail’s pace, but strong signals for a solid, future carbon market are not in the air.
Carbon prices are at an all-time low and do not currently stimulate trade that would make a difference. Hundreds of carbon traders are flocking to look for new employment opportunities, hopefully not for good if the business picks up again in the coming years.
In spite all of this uncertainty, almost 2,000 people from over 100 countries, have gathered in Cologne this year for the 9th Carbon Expo. This is my second visit to this event and I was surprised to find the booths busy and plenaries full. Admittedly there are clear messages of supply surpassing the demand and the long awaited price signal still missing, but there were also some signs of relative optimism.
The annual World Bank report on the State and Trends of the Carbon Market 2012 was launched with a message that the volume of US$ 176 billion in 2011 was the highest ever (an 11% increase over 2010), but that this market is increasingly dominated by Europe. Pre-2013 credits from the Clean Development Mechanism (CDM), known as ‘Certified Emissions Reductions’ (CERs) went down by 32%, Joint Implementation activity was down by 36%. Post-2012 CERs grew by 63% resulting in a total volume of US$2 billion. Africa is emerging as a seller of post-2012 CERs, which is a welcome diversification from the earlier trade dominated by a few emerging economies.