US trading exchanges are starting to consider grabbing a piece of the global carbon trading market.
Traders on the exchange floor
The carbon trading market is expected to double by 2012 as governments and companies attempt to reduce pollution and global emission levels. In 2006, the market for carbon emissions trading was $32 billion. Estimates put the 2012 estimated carbon trading market at $58 billion.
Niamh Alexander, an analyst at Keefe, Bruyette & Woods, said: “The opportunity is that it’s a new product area that’s not traded very heavily on exchanges right now. Lots of exchanges are likely to come up with different structured products to participate in that market.”
NYSE Euronext, which operates the New York Stock Exchange, has begun a partnership with a French back to open a carbon trading market starting in 2008. It will allow carbon dioxide allowance and credit trading and settlements. Analysts predict carbon trading is just one of many new products exchanges will begin to offer customers as they take advantage of new technology that allows customers to trade a larger variety of products more easily.
CME Group, Inc., the world’s largest derivatives market, is also interested in offering carbon trading products.
I, and many others, anxiously await the results of studies on the effectiveness of carbon trading. If it does actually help keep emissions worldwide at a lower level, I’m all for it. The worry, however, is that carbon trading will be an ineffective environmental measure and become solely a moneymaking venture. If, however, this is something that can make money for people and still save the environment, it could become incredibly powerful. Money is a great motivator.
If you find this information useful and would like to get daily updates, feel free to subscribe to our RSS feed.