By Jeff Coelho
LONDON (Reuters) - Carbon markets across the world were valued at 96 billion euros ($122.28 billion) last year, up 4 percent on 2010, helped by a surge in trading activity as record low carbon prices stoked volatility, an analyst report said on Tuesday.
The value of the EU Emissions Trading System (ETS), the world's biggest carbon market, grew by 6 percent to an estimated 76 billion euros, said analysts at Thomson Reuters Point Carbon.
Overall traded volume in so-called EU Allowances (EUAs), including options and auctions, reached around 6 billion last year, a 17-percent increase on 2010.
"The growth in value was relatively smaller than the volume growth due to lower prices," the report said, noting the average weighted EUA price in 2011 was more than a euro below the price in 2010, due to economic concerns and a glut in permit supply.
Benchmark EUA prices collapsed to a record low 6.30 euros a ton on December 14, and prices ended 2011 around half of their value from the start of the year.
The ETS, the 27-nation bloc's main policy instrument to fight global warming, caps carbon dioxide (CO2) emissions on over 10,000 power and industrial plants. It covers around half of the bloc's emissions of the greenhouse gas.
U.N.-BACKED MARKETS MIXED
The EU carbon market is also the biggest buyer of carbon credits issued under the Kyoto Protocol's Clean Development Mechanism (CDM), which awards rich country investments in emissions-reduction projects in the developing world.
But the CDM market last year was beset by a record issuance of credits, which weighed on prices in the world's second biggest carbon scheme.
Point Carbon analysts valued the market for U.N.-issued Certified Emission Reductions (CERs) at 17.8 billion euros in 2011, down nearly 2 percent from the previous year.
Yet traded volume in CERs rose by a third due to heightened activity as CER prices sank to record low levels.
The Kyoto Protocol's Joint Implementation market, which issues carbon credits to emissions-reduction projects in developed countries, saw its value grow by 40 percent to 716 million euros, according to Point Carbon analysts.
They cited a rise in issuance of JI credits and a surge in supply from Russia. "Higher issuance led to declining prices, but also higher traded volume in the secondary market."
The value for Assigned Amount Units, which are tradable emissions rights for parties under the 1997 Kyoto pact, fell 12 percent to a 2011 estimated value of 406 million euros.
OTHER CARBON MARKETS
The North American carbon market's value also declined, falling to 221 million euros in 2011 compared with 367 million in 2010.
Point Carbon attributed the near 40-percent drop in value mainly to limited activity in the over-allocated Regional Greenhouse Gas Initiative, a cap-and-trade scheme covering nine U.S. states in the northeast.
Elsewhere, the value of New Zealand's carbon market rose to an estimated 106 million euros compared with its 2010 value of 91 million euros. Traded volumes grew by 25 percent, as the price of New Zealand units followed the volatile CER prices.
(Reporting by Jeff Coelho; editing by William Hardy and Keiron Henderson)