Other derivative markets have faltered in 2009, but carbon trading has gone right on booming. Participants are enthusiastic about the EU market, yet the real challenge is to implement these ideas elsewhere.
Other derivative markets have faltered in 2009, but
carbon trading has gone right on booming. Participants are
enthusiastic about the EU market, which is set to flourish. But
the real challenge is to implement these ideas elsewhere
– first in the US and then the wider world.
As Siân Williams reports, the specialist
firms are eager to start, but there will be no market until
politicians, industry and the public overcome their
In the city of Leshan in China’s Sichuan province,
a hydroelectricity project is under way. One of the aims is to
earn Carbon Emission Reduction certificates, which can be sold
in Europe to companies wanting to exceed their carbon dioxide
Yet the future of projects such as this depends not just on
what is happening in Europe, but on political debates from
Washington to Ouagadougou.
This coming December, world leaders will meet in Copenhagen
for a summit under the UN Framework Convention on Climate
Change. Riding on that meeting are the prospects for achieving
real progress in the fight against global warming.
For the derivative markets, whose intended role is to help
allocate the cost of emissions cuts as efficiently as possible,
Copenhagen will give the first clues to how carbon trading is
likely to evolve in the next decade.
The derivatives industry has grown enormously in the past 30
years, in large part because of a proliferation in the kinds of
risk that can be traded. Carbon emissions are one of the big
opportunities for the market to make a further leap forward in
But carbon dioxide is not just another commodity. It differs
from the others because of the extent to which its
commoditisation is dictated by governments and its price
subject to scrutiny by politicians, environmentalists,
scientists, economists and utility companies.
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