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Global carbon markets value surged to record $277 bln last year-Refinitiv

by Reuters
Wednesday, 27 January 2021 12:59 GMT

ARCHIVE PHOTO: Steam rises from the cooling towers of the coal power plant of RWE, one of Europe's biggest electricity and gas companies in Niederaussem, Germany, March 3, 2016. REUTERS/Wolfgang Rattay

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Despite a curb in emissions during the pandemic, carbon markets hit an all time high last year in part because of ambitious climate pledges

By Nina Chestney

LONDON, Jan 27 (Reuters) - The total value of global carbon markets jumped 20% last year to a record 229 billion euros ($277 billion) on the expected tightening of emissions caps, research by Refinitiv showed on Wednesday.

Most of the increase in value came from the European Union's Emissions Trading System (EU ETS) which accounted for nearly 90% of global value and much of the traded volume in 2020, the annual Refinitiv Carbon Market Year in Review showed.

Expectations of a more ambitious European Union 2030 climate target for Europe was a supporting factor for carbon last year.

"It might seem counter-intuitive that in a year when emissions dropped significantly due to the pandemic, carbon prices and global market value hit new records," said Hæge Fjellheim, head of carbon research at Refinitiv.

"Major carbon markets saw prices and volumes rise on the expected tightening of emission caps due to more ambitious climate goals in the future," Fjellheim added.

Emissions trading schemes, or carbon markets, are market-based tools meant to limit greenhouse gas emissions. They put a cap on the amount countries or companies can emit, and if they exceed those limits, they can buy permits from others.

The two regional carbon markets in North America - the Western Climate Initiative and the Regional Greenhouse Gas Initiative - grew by 16% last year to 22 billion euros and 1.7 billion euros respectively, Refinitiv said.

There is no momentum towards a cap-and-trade system at the national level in the current U.S. Congress, but President Joe Biden's administration is pursuing other measures to cut carbon in various economic sectors.

Meanwhile, the Chinese government published rules for China's national ETS in the fourth quarter of 2020, after President Xi Jinping's pledge in September to step up the emissions-cut targets of the world's biggest greenhouse gas emitter.

($1 = 0.8256 euros) (Reporting by Nina Chestney; Editing by Bernadette Baum)