SOURCE: Point Carbon

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March 01, 2010 08:30 ET

US Offset Market Worth $74 Million in 2009

Point Carbon Publishes Review of US Offset Market

WASHINGTON, DC--(Marketwire - March 1, 2010) -  In 2009 the total US offset market transacted 19.4 million tons (Mt) of carbon dioxide equivalent (CO2e) worth $74 million, according to Point Carbon. The report, US Offset Markets in 2010: The Road Not Yet Taken, is the first of its kind to provide an in depth survey of the US carbon offset market. Point Carbon is the leading independent provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets.

The report describes a growing and surprisingly mature market, even as volumes have been held back by policy uncertainty. The supply of reductions in 2009 reached an all time high of 29 million tons (Mt) of CO2e, reflecting a 13 percent increase from 2008. Of those credits, many were moving towards certification by the Climate Action Reserve, a leading North American offset standard and registry, which accounted for 65 percent of the traded value in the 2009 US offset market.

Carbon funds and aggregators provided leadership by purchasing 39 percent of all credits in the primary market, followed closely by financial intermediaries and emitters, which accounted for in 30 percent and 25 percent of trades respectively. The market is still dominated by over-the-counter transactions, which represent 63 percent of the market. Compliance eligibility drove the market, as buyers looking to purchase credits for use in future cap-and-trade schemes traded $48 million in 2009, 65 percent of the total. 

"The growth we are seeing has been driven by forward thinking investors and developers, who either hope to hedge policy risk by buying early or capitalize on a new expanding market. However, until federal cap-and-trade passes, fundamental demand from emitters will continue to be constrained. We forecast tremendous growth in 2010 if this legislation is indeed passed," said Justin Felt, author of the report.

Once allowance markets such as the Regional Greenhouse Gas Initiative (RGGI) are included, the size of the US carbon market expands to $2.7 billion with 841 Mt CO2e trading hands. As US Offset Markets in 2010 outlines, once a compliance scheme is in place, volumes and values will rise exponentially for carbon markets, including offsets.

About Point Carbon
Point Carbon is a world-leading provider of independent news, market analysis and advisory services for global power, gas and carbon markets. Point Carbon's comprehensive services provide professionals with market-moving information through monitoring fundamental information, key market players, and business and policy developments.

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