Emissions traders step on the gas

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The Independent Online

Trading in greenhouse gas emissions has surged far ahead of expectations and is set to have quadrupled over the course of this year.

Trading in greenhouse gas emissions has surged far ahead of expectations and is set to have quadrupled over the course of this year.

Basing their forecasts on 2001 figures, which showed only very gradual growth, derivatives analysts assumed the emissions market would not start functioning properly until at least 2008.

But figures due for release in the coming weeks will show that trading in emissions reductions as commodities has soared, and analysts now believe a true market could be in place by the end of 2004. The only glaring omission at this stage is the US, which is being shunned for its failure to sign up to the Kyoto Accord.

The report, from research group PointCarbon, shows that the main driver has been the growing number of countries rushing to become involved. Six years ago, 100 per cent of carbon emissions trading took place in the US, but Europe has now warmed to the idea. Corporations have also been energetic in striking deals with one another.

CO2e, a company pioneering emissions trading, contributed to the research and shares the belief that the new figures are encouraging. "Out of today's fragmented market will come convergence as regional, national and international rules become more fully defined," said Corinne Boone, managing director.

While Kyoto has not yet been fully ratified, companies and governments have latched on to the financial benefits of emissions trading. Many small firms in the alternative energy sector are in effect having their development paid for by utilities and manufacturers that need to buy emissions credits.

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