This marked a third consecutive year of strong growth and a five-fold increase compared to 2017. All major carbon markets saw prices rising on current or expected tightening of market rules.
Growth was attributed to record prices in the European Emissions Trading System (EU ETS), which makes up almost 80 per cent of global traded volume. The average carbon price in the EU ETS was 25 euros per tonne last year, up by 9 euros compared to 2018.
Anders Nordeng, Senior Carbon Market Analyst at Refinitiv, comments: “We attribute the European price rally mainly to anticipation of the Market Stability Reserve that came into effect in January 2019. The MSR withholds a significant amount of emission allowances that would otherwise have come to market and thereby serves to tighten supply. The Green Deal proposals of the new European Commission and talk of reopening the 2030 emissions target also lent support to prices.”
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In North America, both the Western Climate Initiative and the Regional Greenhouse Gas Initiative markets grew significantly. Overall, turnover increased 74 per cent, to reach 22 billion euros. Prices increased based on expectations of tighter credit supply in 2021 when both markets enter a new phase with more ambitious caps.
China’s national ETS will start in 2020, initially covering the power sector with the ambition to expand to other sectors. In the eight Chinese pilot emissions trading systems, about 93 million allowances changed hands in 2019 – significantly more than the 78 million total volume of 2018. The total value of the combined pilots reached 272 million euros, 40 per cent higher year-on-year. (mfo)
