Global carbon traded volume in 2011 were about 8 billion tCO2 up 19% compared to 2010, but the traded values were about euro 96 billions up only 4%. This was because carbon price was cheap; economic crisis in EU forced EU to issue more allowances (right to emit carbon) to its member states, leading to more supply but less demand. Carbon price traded yesterday was only about $3.5 per tCO2 down from $15 few months ago.
Japan, Canada, Russia decided not join second commitment of the Kyoto Protocol (2013-2020). This decision made carbon market in Japan become smaller and smaller.
Carbon markets have probably moved to New Zealand and Australia. However, because the two countries have less population, the size of the markets is still relatively small.
Implications for REDD+ projects:
REDD+ is somehow still attractive to EU buyers due probably to less investment costs, high carbon emission reduction potentials, and of course high risk, and because EU is still part of the Kyoto. Investors expect carbon price to go up about $10-12 for Kyoto’s second period starting from 2013-2020, but it is still uncertain.
Implications for REDD+ in Cambodia
REDD+’s Bilateral partnership: In addition to the already shrinking market, countries that decided to not ratify the second commitment period of the Kyoto Protocol will have difficulties in talking to UNFCCC parties because they are no longer a member of the Kyoto. This would mean that their proposed REDD+ guidelines or whatever guidelines under the bilateral partnership program would not be even listened to. Without approval, no one would buy REDD+ credits under any bilateral partnership scheme with non-Kyoto parties. Therefore, I think Cambodia needs to clarify the bilateral partnership program with the relevant countries.
EU Partners: Although EU markets are still uncerntain, 2nd commitment period will see increase in carbon price because EU has set a tight reduction target (20% by 2020, 50% by 2050). I think Cambodia should have some partners from EU because Cambodian government is committed to managing its forests under the REDD+ scheme
California (CA) Carbon Trading: CA adopted emission trading scheme in October 2011 and some trading begins this year. It also has increasing carbon markets, but they seemed to prefer credits from South America.
Australia Carbon Tax: from July 2012, Australia will impose a carbon tax of A$23/tCO2. So, carbon market there would increase as emitters have to offset their emissions. I think Cambodia may also want to find some carbon partners from Australia.
Well, my analysis is not always right.
Thanks for reading!