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Aruba, february 28, 2014 - In 2014, the value of the globally-traded carbon market will rise by two thirds from 2013 - reaching €64bn, (€39bn in 2013), with volume increasing by 3% to 9.6 Gt CO2e, according to analysis by Thomson Reuters Point Carbon.
Most of this year’s growth by value is expected to come from the 8.3 Gt EU Allowances (EUAs) that will change hands. This 3% volume increase (up from 8 Gt last year) will produce value growth of 70%; generating both the largest volumes and value globally. Emil Dimantchev, analyst at Thomson Reuters Point Carbon, anticipates that such significant growth will be driven by “expectations that after imminent backloading is implemented early in 2014, EUA prices could rise to €7.5/t, increasing over-the-counter and exchange traded liquidity. This would lead to an astounding increase in value, up by more than two thirds to €61bn from €36bn in 2013”.

He added that even though the volume growth is minimal year-on-year, and the auction volume will actually decrease as a result of backloading, market confidence is expected to improve so much that it would drive the EUA price up by 35% per tonne - an increase substantial enough to create a surge in the EU ETS value without a correspondingly large increase in volume.
The outlook for the two regional North American markets – the Western Climate Initiative (WCI) and the Regional Greenhouse Gas Initiative (RGGI) – is that together they will create the second largest carbon market by value for the second year in a row. Olga Chistyakova, senior analyst and author of the report concluded, “We expect the WCI and RGGI to generate €2.7bn in value this year, up 22% from last year. However, the WCI will account for two thirds of their combined volume, contributing 272 million tonnes”. Chistyakova added that the North American markets are here to stay, continuing to drive volume and value growth in the future. Maria Kolos, analyst at Thomson Reuters Point Carbon highlighted that, “We expect the primary and secondary Certified Emission Reduction (CER) market to remain strong, holding on to its position as the second largest market by volume at 703 million tonnes, albeit at a low value of €236m. This is amid a steady annual decline in volume and an expiring lifeline in the absence of a political remedy”.

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