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State and Trends of the Carbon Market 2003

Author

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  • Franck Lecocq
  • Karan Capoor

Abstract

The emerging carbon market encompasses both project-based emission reduction transactions, whereby a buyer participates in the financing of a project which reduces greenhouse gases (GHGs) emissions, compared with what would have happened otherwise, and gets some of the emission reductions (ERs) thus generated in return; and, trades of GHG emission allowances allocated under existing, or incoming, cap-and-trade GHG emissions control regimes. This Review of the state and trends of the carbon market as of November 2003, based on material provided by Evolution Markets LLC, Natsource LLC and PointCarbon, and on direct interviews with market participants, suggest that: volume exchanged on the carbon market has more than doubled since 2002; buyers are governments, and public-private partnerships like the Prototype Carbon Fund; in 2003, nine out of ten tones of emission reductions originate from projects located in transition economies or developing countries; prices differ depending on the segment of the market, and on the structure of the transaction; allowance markets dominate in number of transactions, but volume exchanged remains small compared with project-based transactions; and, because of long lead time between project preparation and first "yield" of emission reductions, and absent clarification of the validity of project-based emission reductions beyond 2012, the window of opportunity for project-based transactions is rapidly closing. The report further discusses volumes of GHG Emission Reductions (ERs) up to 2012 only, to provide an idea of the volume that might be available for compliance, since 2012 is the end of the first commitment period of the Kyoto Protocol, and a milestone in most regimes. For projects where vintages 2013 and beyond are purchased (in particular in forestry-related projects), it was assumed an even annual accrual of ERs, unless known otherwise. Also, throughout the paper, volumes are reported in metric tones of CO2 equivalent (tCO2e).

Suggested Citation

  • Franck Lecocq & Karan Capoor, "undated". "State and Trends of the Carbon Market 2003," World Bank Publications - Reports 13416, The World Bank Group.
    • Handle: RePEc:wbk:wboper:13416
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    Citations

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    Cited by:

    1. Hickson, Allister, 2006. "Motor vehicle insurance rating with pseudo emissions coverage," Ecological Economics, Elsevier, vol. 58(1), pages 146-159, June.
    2. Zhang, ZhongXiang, 2010. "Is it fair to treat China as a Christmas tree to hang everybody's complaints? Putting its own energy saving into perspective," Energy Economics, Elsevier, vol. 32(Supplemen), pages 47-56, September.
    3. Mandla Sv Gantsho & Patrick Karani, 2007. "Entrepreneurship and innovation in development finance institutions for promoting the clean development mechanism in Africa," Development Southern Africa, Taylor & Francis Journals, vol. 24(2), pages 335-344.
    4. Marenya, Paswel Phiri & Nkonya, Ephraim M. & Xiong, Wei & Rossel, Jose Deustua & Edward, Kato, 2012. "Which would work better for improved soil fertility management in sub-Saharan Africa: Fertilizer Subsidies or Carbon Credits?," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126904, International Association of Agricultural Economists.
    5. Zhang, ZhongXiang, 2004. "The World Bank's prototype carbon fund and China," MPRA Paper 13222, University Library of Munich, Germany, revised Dec 2005.
    6. Zhang, ZhongXiang, 2006. "Toward an effective implementation of clean development mechanism projects in China," Energy Policy, Elsevier, vol. 34(18), pages 3691-3701, December.
    7. I. Jürgens & B. Schlamadinger & P. Gomez, 2006. "Bioenergy and the CDM in the Emerging Market for Carbon Credits," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 11(5), pages 1051-1081, September.
    8. Patrick Karani & Mandla Gantsho, 2007. "The Role of Development Finance Institutions (DFIs) in␣Promoting the Clean Development Mechanism (CDM) in Africa," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 9(3), pages 203-228, August.
    9. Lecocq, Franck & Crassous, Renaud, 2003. "International climate regime beyond 2012 - are quota allocation rules robust to uncertainty?," Policy Research Working Paper Series 3000, The World Bank.
    10. Kruger, Joseph & Pizer, William A., 2004. "The EU Emissions Trading Directive: Opportunities and Potential Pitfalls," Discussion Papers 10679, Resources for the Future.
    11. Ellis, Jane & Winkler, Harald & Corfee-Morlot, Jan & Gagnon-Lebrun, Frederic, 2007. "CDM: Taking stock and looking forward," Energy Policy, Elsevier, vol. 35(1), pages 15-28, January.
    12. Marenya, Paswel & Nkonya, Ephraim & Xiong, Wei & Deustua, Jose & Kato, Edward, 2012. "Which policy would work better for improved soil fertility management in sub-Saharan Africa, fertilizer subsidies or carbon credits?," Agricultural Systems, Elsevier, vol. 110(C), pages 162-172.
    13. Cacho, Oscar J., 2008. "Carbon markets, transaction costs and bioenergy," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6007, Australian Agricultural and Resource Economics Society.

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