Carbon Market Retrospective 2011: a record year, for better or worse

Last year was full of surprises, good and bad included. Of course, for worse, CER prices lost two-thirds of their value within the year, from almost 14 €/t in June to less than 4.5 €/t at the end of 2011. On the other hand, the CDM pipeline operated at full capacity in 2011. While 130 million CERs were issued on average for the last 3 years, 319 million emission reduction credits were dished out last year alone representing an all time high.

This issuance spike is explained by two main reasons: firstly, by the registration and the UNFCCC optimizing the issuance process, but most of all by the project developers’ rush to registration (see chart) due to the post 2012 uncertainties.

Registered CDM projects by year

Indeed, despite record long negotiations in Durban, the fate of the Kyoto Protocol is still undermined by the major issue of visibility. Albeit the CDM is reaffirmed as the main market tool to reduce emissions globally, the question of the lack of a concrete pledge, and hence concrete level of demand for credits, is still open.

– Alexis Poullain is an analyst for eCO2market. This article originally appeared in the January 3rd, 2012 edition of eCO2abacus, our free carbon market newsletter. Click here to view old editions or sign up to receive new editions via email.

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