Market Trend
Carbon emissions trading has been steadily increasing in recent years. According to the World Bank's Carbon Finance Unit, 374 million metric tonnes of carbon dioxide equivalent (tCO2e) were exchanged through projects in 2005, a 240% increase relative to 2004 (110 mtCO2e) which was itself a 41% increase relative to 2003 (78 mtCO2e).
The increasing costs of permits have had the effect of increasing costs of carbon emitting fuels and activities. Based on a survey of 12 European countries, it was concluded that an increase in carbon and fuel prices of approximately ten percent would result in a short-run increase in electrical power prices of roughly eight percent. This would suggest that a lowering cap on carbon emissions will likely lead to an increase in the costs of alternative power sources. Whereas a sudden lowering of a carbon emission cap may prove detrimental to economies, a gradual lowering of the cap may risk future environmental damage via global warming.
In 2010 Chicago Climate Exchange (CCX) has ceased its trading of carbon emissions.
Read more about this topic: Carbon Emission Trading
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