Global carbon markets grow 34% in 2019, led by Europe

Carbon markets around the world grew for a third consecutive year in 2019, and the value has grown almost fivefold since 2017, the calculation shows. “Record strong prices in the European Emissions Trading System (EU ETS), which makes up almost 80% of the global traded volume, was the main reason behind the growth in value,” Refinitiv said in its last report.

The main driver for the price increase was the Market Stability Reserve which came into effect in January 2019, withholding a significant volume of allowances and tightening the supply side, it said.

“The Green Deal proposals of the new European Commission, and talk of reopening the 2030 emissions reduction target, also lent support. Higher carbon prices made gas power plants more competitive against coal in Europe, and helped reduce emissions,” Refinitiv said.

European climate and energy policy discussions are set to intensify in 2020 as the new European Commission starts presenting draft legislation to implement an emissions reduction target for 2050 as well as adjusting the 2030 target.

In addition, market participants will be watching the German coal phase-out and the negotiations for a future relationship between the EU and UK after Brexit, Refinitiv said.

Meanwhile, the two North American carbon markets – the Western Climate Initiative and the Regional Greenhouse Gas Initiative – both saw an increase in traded volume and value, with their combined value in 2019 jumping 74% to Eur22 billion, it said.

The global valuation also includes carbon markets in South Korea and New Zealand, and an emerging market in Mexico.