Review of carbon markets in 2015 and outlook for 2016-2018

Some 6.2 gigatonnes worth of emission allowances and offsets were traded globally in 2015. Traded volumes contracted 19% from 2014. Because of higher prices in most markets, the total value increased 9% to €48.4 billion.

Seen as a whole, the world of carbon trading was characterized by two opposite trends in 2015: volumes continued to contract and prices continued to increase. Traded volume dropped by 19 percent, from 7.6 Gt CO2 worth of transactions in 2014 to 6.2 Gt in 2015. The overall turnover increased 9 percent from €44.3 to €48.4 billion.

Europe remains by far the dominant market, with 80 percent of the volume and 77 percent of the value. European volumes, at 5 Gt, dropped for a second consecutive year, from its peak level of 8.1 Gt in 2013. European carbon prices rose over the year, from an annual average of €6/t in 2014 to €7.7/t in 2015.

The North American markets grew 121% in terms of volume and 220% in terms of value. Precisely, the most interesting trend in 2015 was the rapid growth of carbon trading in the California/Quebec market known as Western Climate Initiative (WCI), and in the Regional Greenhouse Gas Initiative (RGGI) market that consists of a group of U.S. states

Another interesting observation from the market comparison is the limited activity in the Asian emission trading schemes, including the Chinese pilot schemes. The emerging Asian carbon markets are very recent creations and have not yet acquired the same level of maturity.

If we look forward, we expect volumes to rise slightly in 2016. Assuming prices to also end higher than in 2015, we forecast the overall value of carbon markets to grow by a quarter. We believe emission trading will remain modest in China and South Korea, despite the huge emission volumes covered by their emission trading schemes. In terms of transactions, Europe and North America will continue to represent more than 95%.