EU carbon trade volumes rise 2% in 2013

European carbon trading volumes rose 2 percent in 2013, the ninth consecutive year of growing activity in the EU Emissions Trading Scheme.

A record 9.48 billion emissions units changed hands on Europe’s main four carbon exchanges last year, despite tumbling prices for all carbon credits traded in the European market.

Trade in EUAs, the primary currency in the European carbon market, jumped by 23 percent to 8.86 billion units in 2013, the data showed. However, this was offset by a sharp drop in activity in the secondary market for U.N. carbon credits, which has also been beset by a supply surge coupled with a drop in demand. Just 474 million Certified Emissions Reductions (CERs) and 114 million Emissions Reduction Units were transacted last year, figures more than 70 percent below their 2012 highs.

Additional demand for the credits via new markets in other countries has failed to emerge, causing their value to crash by 98 percent in five years to under 40 cents – below the cost of generation.

Emissions options contracts worth a further 502 million units were bought and sold in 2013 – a 40 percent drop on the previous year.

If we speak about the market share, we can say that futures contracts – traditionally the market’s preferred instrument type – made up just over 88 percent of all volumes, the lowest level since 2009.

Spot volumes, on the other hand, jumped more than fivefold to 1.1 billion thanks to the 808 million spot allowances auctioned by EU member states over the past 12 months.

Under EU rules, governments will sell most of the EUAs to be allocated between 2013 and 2020.

German bourse EEX hosted 88 percent of last year’s auction volumes in a bid to attract liquidity but discounting those sales, activity dropped 6 percent year-on-year. Overall, EEX handled 9 percent of all trades in 2013, well below market leader ICE Futures Europe, which controlled 86 percent of the market.

 

 

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