Global carbon market grew 20% in 2020
ECONOMY & POLICY

Global carbon market grew 20% in 2020

The total value of global carbon markets grew 20% in 2020, reaching a record $275.84 billion, according to the annual Refinitiv Carbon Market Year in Review.

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The latest Refinitiv Carbon Market Year in Review indicates that the carbon market grew for the fourth consecutive year of record growth and more than five times the value in 2017.

Most of the increase in value came from the European Emissions Trading System (EU ETS) which accounted for nearly 90% of global value and most of the traded volume (totalling 10.3 billion allowances) in 2020.

Over eight billion emission allowances changed hands in the European carbon market in 2020, nearly 20% more than in 2019, despite an estimated 14% emissions drop in the EU ETS sectors.

The North American regional carbon markets━the Western Climate Initiative (WCI) and Regional Greenhouse Gas Initiative (RGGI) followed a similar pattern to Europe, with prices crashing in March and April but recovering by Q4 2020 on expectations of policy changes resulting in tighter future carbon market balances. The WCI and RGGI grew by 16% in terms of overall market value from 2019, to €22 billion ($26.50 billion) and €1.7 billion ($2.07 billion), respectively.

Other markets followed a similar pattern – prices in North America’s Western Climate Initiative (WCI) and Regional Greenhouse Gas Initiative (RGGI) as well as New Zealand’s ETS crashed in March and April but recovered by Q4 2020. The WCI and RGGI grew by 16% in terms of overall market value from 2019, to €22 billion and €1.7 billion, respectively. New Zealand’s market value rose to €516 million ($621.55 million) on higher average allowance prices, nearly 20% higher than in 2019.

South Korea’s carbon market experienced a major price crash but did not recover to pre-pandemic levels despite market tightening reforms coming into effect in 2021. A volume surge in this otherwise low-transaction market made for a total value 10% higher than 2019, at ~€829 million ($998.58 million).

The Chinese government published long-awaited rules for China’s national ETS in Q4 2020, after President Xi Jinping’s unexpected pledge in September to step up the climate change mitigation targets of the world’s biggest emitter. Despite pandemic-induced lower demand, elevated average allowance prices led to a total combined market of €257 million ($309.57 million), slightly higher compared to 2019.

The total value of global carbon markets grew 20% in 2020, reaching a record $275.84 billion, according to the annual Refinitiv Carbon Market Year in Review. __________ The latest Refinitiv Carbon Market Year in Review indicates that the carbon market grew for the fourth consecutive year of record growth and more than five times the value in 2017. Most of the increase in value came from the European Emissions Trading System (EU ETS) which accounted for nearly 90% of global value and most of the traded volume (totalling 10.3 billion allowances) in 2020. Over eight billion emission allowances changed hands in the European carbon market in 2020, nearly 20% more than in 2019, despite an estimated 14% emissions drop in the EU ETS sectors. The North American regional carbon markets━the Western Climate Initiative (WCI) and Regional Greenhouse Gas Initiative (RGGI) followed a similar pattern to Europe, with prices crashing in March and April but recovering by Q4 2020 on expectations of policy changes resulting in tighter future carbon market balances. The WCI and RGGI grew by 16% in terms of overall market value from 2019, to €22 billion ($26.50 billion) and €1.7 billion ($2.07 billion), respectively. Other markets followed a similar pattern – prices in North America’s Western Climate Initiative (WCI) and Regional Greenhouse Gas Initiative (RGGI) as well as New Zealand’s ETS crashed in March and April but recovered by Q4 2020. The WCI and RGGI grew by 16% in terms of overall market value from 2019, to €22 billion and €1.7 billion, respectively. New Zealand’s market value rose to €516 million ($621.55 million) on higher average allowance prices, nearly 20% higher than in 2019. South Korea’s carbon market experienced a major price crash but did not recover to pre-pandemic levels despite market tightening reforms coming into effect in 2021. A volume surge in this otherwise low-transaction market made for a total value 10% higher than 2019, at ~€829 million ($998.58 million). The Chinese government published long-awaited rules for China’s national ETS in Q4 2020, after President Xi Jinping’s unexpected pledge in September to step up the climate change mitigation targets of the world’s biggest emitter. Despite pandemic-induced lower demand, elevated average allowance prices led to a total combined market of €257 million ($309.57 million), slightly higher compared to 2019.

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