The Global Carbon Market 2009: Trading Thin Air

Global climate change and the reduction of greenhouse gases (GHG) are significant concerns for many businesses throughout the world, including those in the United States. The current international agreement on combating climate change is the Kyoto Protocol, which came into force on February 16, 2005. Countries that have ratified this protocol have committed to reduce their emissions of carbon dioxide and five other greenhouse gases, or engage in emissions trading if they maintain or increase emissions of these gases.

As countries meet their commitments under the Kyoto Protocol, the global carbon market has experienced rapid growth. From 2005 to 2008, the market grew from $11 billion to $126 billion. The Global Carbon Market 2009: Trading Thin Air examines the current and potential markets for carbon trading including:

Mandatory (Compliance) Markets
- European Union Emissions Trading Scheme (EU ETS)
- Regional Greenhouse Gas Initiative (RGGI)
- Rest of World Markets including Japan and Australia
- Waxman-Markey Bill [The American Clean Energy and Security Act of 2009 (ACES)
Voluntary Markets
- Chicago Climate Exchange (CCX)
- Over-the-Counter (OTC)
- Other Regional US Markets

The US is responsible for 23% of world GHG emissions, but as of 2009, there are no federal restrictions or binding federal carbon trading system. However, many states and corporations have committed to cutting GHG through emissions trading. Although the Kyoto Protocol will expire in 2012, there is general consensus that a cap-and-trade system will be established in the US and a global carbon trading system will be a fixture in the world economy for decades. Carbon is predicted to become a commodity with its emissions regulated worldwide.

The Global Carbon Market 2009: Trading Thin Air makes important forecasts regarding the future of the carbon market and highlights ways current and prospective players can position themselves in this global market. Some of the main markets for carbon reduction projects include renewable energy (solar, wind and hydropower), methane capture and carbon capture and storage (sequestration). These are all sectors in which the US excels, providing gateways into carbon market participation.