It has been announced today that European Climate Exchange has now traded over a billion tons of carbon since its inception two years ago. The underlying market value of this volume of trade stands at 18.3 billion euros.
The ECX is by far the largest market for trading the European Union’s carbon credit scheme, a central plank in its push to meet the Kyoto targets. The scheme makes companies that exceed their carbon quotas purchase further credits on the ECX.
Carbon credits help combat climate change by assigning a monetary value to carbon dioxide emissions, eventually making it cheaper for a company to reduce its emissions than to buy further credits. Managing emissions is one of the fastest-growing segments in financial services in the City of London’s financial district with a market now worth about $30 billion. Louis Redshaw, a former trader at Enron and now head of environmental markets at Barclays Capital predicts that
“Carbon will be the world’s biggest commodity market, and it could become the world’s biggest market overall.”
Barclays is one of a number of major global companies, such as Shell and Morgan Stanley, who have signed to for the ECX.