Annual Point Carbon survey reveals growing confidence in EU ETS and ongoing concerns about CDM.

Confidence in the global carbon market remains decidedly mixed, with continued optimism about the future of the EU emissions trading scheme (ETS) undermined by concerns about the global offsetting market and scepticism that the US will deliver a national carbon market.

That is the conclusion of the annual carbon market survey undertaken by analyst Thomson Reuters Point Carbon, which yesterday confirmed that despite recent cyber attacks, confidence in the flagship EU ETS remains relatively high.

The poll of more than 2,500 market participants and watchers revealed that 49 per cent consider the ETS the most effective means of curbing emissions in the bloc, up from 43 per cent last year.

Significantly, a record 59 per cent of respondents working for energy and industrial firms covered by the scheme said that it had prompted them to reduce their emissions, while a further nine per cent said they were planning emission cuts.

“After the recent cyber attacks and thefts of EUAs there was talk of the EU ETS having been discredited. However, our survey shows quite the reverse: that confidence in the scheme among participants is growing and that the EU ETS gains in maturity and results in more emissions cuts each year,” said Endre Tvinnereim, senior analyst at Point Carbon and one of the report’s authors.

However, confidence in the UN-backed Clean Development Mechanism (CDM) offsetting scheme appears far less robust, with only 18 per cent of respondents classifying the CDM as a “mature market” and less than a third arguing it represents the most cost-effective means of cutting emissions in developing countries.

There are also widespread fears that the market could be disrupted by continued efforts by the EU to ban carbon credits from projects it regards as ineffective, with 56 per cent revealing they think the EU will ban project types beyond the HFC and adipic acid N2O credits that it has already said it will stop being sold into the ETS.

In addition, a majority of respondents now believe the US will not pass a national carbon trading mechanism, while confidence that an international treaty to replace or extend the Kyoto Protocol will be agreed has also fallen.

However, Elizabeth Zelljadt, senior analyst at Point Carbon, insisted there were still plenty of causes for optimism across the global market.

“With the focus in North America shifted from US federal climate policy to regional initiatives, all eyes have turned to California, which will be launching its own emissions trading programme in 2012, not dissimilar to RGGI [Regional Greenhouse Gas Initiative] on the East Coast, but larger in terms of emissions covered, with close 400 Mt covered in 2015,” she said. “California is already preparing for its emissions trading scheme now, and although it has not yet launched, emissions reductions are already taking place or being planned in just over half the respondents’ companies.”

Her comments were echoed by her colleague, Veronique Bugnion, who insisted that despite the mixed picture “all the signs are that global carbon markets will continue to grow both in volume and value this year and next.”

Respondents to the poll suggested that the average global carbon price will reach €31 (£26) a tonne by the end of the decade.

In related news, the RGGI voluntary cap-and-trade scheme this week reported that the auctioning of emission allowances has raised nearly $780m (£479m) for 10 eastern states, about 80 per cent of which has been invested in projects designed to improve energy efficiency, reduce bills for the fuel poor and improve access to renewable energy.

By James Murray