Carbon Credit Info

The international carbon markets grew to $127 billion in 2010, nearly doubling from 2007 levels. Rapid growth is also expected over the next ten years. Some industry projections forecast the carbon markets will reach $1.2 trillion by 2020. Regulation is creating a number of national and international cap and trade schemes.

Market Drivers

In 2006 The Stern Review on the Economics of Climate Change came up with a calculated cost of $314 per tonne of carbon. Legislation is increasing the greenhouse gas (GHG) reporting requirements for large emitters. The UK is leading the legislative drive with the CRC Energy Efficiency Scheme, a local cap and trade scheme. The scheme became effective in April 2010 and affects 5,000 businesses and government bodies in the UK. In the United States the US Cap and Trade scheme is expected to be enacted during 2011.

The US Environmental Protection Agency (EPA) has also been also tasked with regulating emissions in the US if bills fail. Approximately 50% of the US states have already implemented regulation for mandating GHG reporting. SEC reporting requirement for emissions.

These regulations expected to extend to SME's:

• UK : Companies Act changed in Oct 09 to mandate firms with more than 50 employees or £5.6 million in revenue to report emissions reduction plans
• Similar trends expected in other markets
• Carbon prices forecasted to rise by 68% annually through 2013
• At the same time that corporates are being regulated to reduce emissions or offset to attain carbon neutrality, cost of offsetting expected to increase
• Compliance costs has potential to adversely impact corporate valuations
• Corporates will need to centralise carbon management functions
• Parent with subsidiaries in different markets will need to monitor diverse compliance requirements