Carbon Market: The good, the bad and the money

After finding some of the pros and cons of cap and trade carbon schemes in the US, several studies were recently published on the carbon market’s global bottomline: How much should energy-intensive industries pay for compliance?

According to market analyst Point Carbon, global carbon markets could be worth almost 2 trillion (USD $3.1 trillion), with total transaction volume forecast at 38 billion tonnes carbon dioxide equivalent (Gt CO2e) per year by 2020.

Around 67% would be traded within a US emissions trading scheme (ETS), said Point Carbon, while the second largest ETS, the EU scheme, would occupy 23% of the global market.

World Bank reported the global carbon market more than doubled last year to a whopping US$64 billion (€47 billion). The value of EU ETS last year was said to have doubled as well to around $50 billion. World Bank, however, noted that the market is said to be lagging from its full potential because of projects leveling off in developing countries.

In a study by Carnegie Mellon researchers, the short-term effects of implementing a $35/ton of carbon dioxide could cut as much as 10% of emission levels.

“Our findings indicate that significant reductions in CO2 can and would be observed in the near-term, even before more efficient power generation technologies are deployed on a wide scale.”

Don Dears of the George C. Marshall Institute is stating otherwise. He said that cap & trade legislation for CO2 emissions will be the largest hidden tax increase ever passed by Congress.

According to him:

“What would happen to the markets where billions of dollars in CO2 credits are being traded when it becomes apparent that CO2 emissions can’t be significantly cut? Think ENRON on a massive scale.”


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