Carbon Market Value to Gain 15% in 2014 on EU Surplus Fix

The value of the global carbon market will rise 15 percent this year to 46 billion euros ($63 billion), driven by the European Union’s plan to postpone sales of pollution permits, according to Bloomberg New Energy Finance.

The measure may push European carbon prices up more than 50 percent on average to 7.5 euros a metric ton this year from less than 5 euros today, New Energy said in a statement. The value of carbon markets in North America is expected to climb in 2014, according to the London-based carbon analysis group.

Representatives of the EU’s 28 member states voted today to support a measure to remove 900 million tons of carbon permits over the next three years and return them at the end of the decade in an effort to drain a surplus that dragged prices to a record low. That’s about half of a year’s supply in the EU emissions market, the world’s biggest by traded volume.

EU carbon price swings may narrow as last year’s “regulatory anxiety” over the proposed supply reduction eases, said Matthew Gray, a carbon analyst at Jefferies Group LLC in London. “Volatility will likely decline in the second half as the market normalizes after a period of persistent politicization, which is why traded volumes may fall.”

The volume of emission credits and permits traded this year will decline 18 percent to 8.3 billion metric tons of carbon dioxide equivalent from 10.1 billion in 2013, New Energy said. A year ago, the research group had forecast global market volume of 12.5 billion tons for 2013.

The carbon market’s value declined 19% to 40 billion euros in 2013, the lowest since 2007, according to New Energy.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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