The EU recently approved a package of post-2012 commitments to reduce emissions, with a promise to reduce even more if other countries join an international agreement to be negotiated in Copenhagen later this year. The US is also considering a comprehensive climate policy. These two proposals together will present an opportunity to scale up developing country supply of carbon.
This is a golden opportunity which challenges the international community to develop new thinking on how to scale up climate mitigation to promote sustainable development, said reports co-author Karan Capoor, referring to average likely demand of 560 million tonne of carbon dioxide emissions per year from 2012-20 compared to just about 80 million tonne of carbon dioxide emissions that was registered in the CDM in its best year so far.
The CDM executive board is currently working to improve the efficiency of the project approval process. Now is the time to create a transparent and well-functioning regulatory framework, starting with streamlining and simplifying the rules governing the concept of additionality, said Philippe Ambrosi of the World Bank, and co-author of the report.
Recent scientific research and findings by the intergovernmental panel on climate change (IPCC) and others call for industrialised countries to collectively reduce emissions even more aggressively (by 25-40% below 1990 levels by 2020) than the proposals on the table for Copenhagen. If the carbon markets respond to the recommendations of the scientific community in terms of required GHG emission reductions, a carbon market in the order of $150 billion per year of traded certified emission reductions could be envisioned.
Kathy Sierra, World Bank vice-president for Sustainable Development, said, As one response to the climate crisis, a deep and global carbon market continues to hold the promise to deliver significant benefits to both developed and developing countries alike.
The report includes market data provided by carbon broker Evolution Markets Inc. The carbon market has shown a remarkable ability to double in volume in the midst of a global economic recession, and that demonstrates the importance of the market on a global scale, said Andrew Ertel, CEO of Evolution Markets Inc.
82% of transacted volumes in the carbon market in 2008 were for projects in renewable energy, fuel switching and energy efficiency
70% of new projects in 2008 were in hydro, wind, biomass energy and energy efficiency of power generation
China accounts for the lions share of confirmed transactions in the primary CDM market
The CDM pipeline now consists of over 4,500 projects in about 80 countries, with an increasing number from countries in Sub-Saharan Africa
World Bank carbon funds and facilities have 186 projects with an estimated asset value of $2.3 billion