North American Carbon Market Valued at $2.4 Billion
The value of the North American carbon market grew 279% in 2009, to $2.4 billion, according to the World Bank. With a 487% increase in traded volume from 2008, the 2009 traded volume of North American carbon credits represented 880 million tons of carbon dioxide (CO2) emissions reductions.
The Regional Greenhouse Gas Initiative (RGGI), the first mandatory greenhouse gas cap-and-trade market in the U.S., was the largest carbon market in North America. RGGI covers the electricity sector and seeks to cap and reduce emissions in 10 northeastern states. RGGI allowances traded at a lower-than-expected average price due to the overallocation of emission permits.
The passage of the Waxman-Markey climate bill in the House of Representatives during the third quarter of 2009 boosted activity in the North American carbon market as many companies bought offsets with the hope they may become eligible in a future federal compliance market. The Senate failed to pass a similar climate bill, which caused fourth quarter trading to drop.
Transactions of US-based projects nearly doubled in 2009 and the volume of offsets issued by the Climate Action Reserve (CAR), a California-based standard for voluntary carbon credits, nearly tripled in 2009, said the World Bank. CAR’s protocols are considered the most likely to be eligible in a federal cap-and-trade program. The program’s credits represented 51% of the US offset market volume, according to the bank. Their average price of $7 in 2009 was also much higher than other types of US voluntary offsets.