Market News

 September 02, 2009
Analyst predicts 2010 recovery for CDM market

 The number of Certified Emission Reduction (CER) offset credits issued under the UN-backed Clean Development Mechanism (CDM) will approximately double next year, according to new research.

The report, which is based on CDM project data submitted to the UN's climate change secretariat, predicts that the total number of CERs issued this year will fall from the 137.8 million tonnes of CO2 equivalent (tCO2e) issued during 2008, to between 118 and 135 million tCO2e.

However, it anticipates that the market will begin to recover next year, with the number of CERs issued reaching at least 235 million tCO2e and potentially rising to 275 million tCO2e.

Speaking to BusinessGreen.com, IDEAcarbon's director of strategy and information, Alessandro Vitelli, said the report reinforced market whispers that CDM-approved project developers were delaying the release of CER credits until demand recovers.

"The view in the market is that developers have not requested issuance of CERs, despite having projects up and running," he explained. "They do not want to release CERs when the price is so low and have taken a financial decision to wait."

Currently, CERs are trading at just over €13, significantly down on the €20 mark they were trading at this time last year. The market has been hit by falling demand from carbon-intensive firms in Europe, many of which have seen emissions fall as industrial output has slumped.

Vitelli added that there were already some signs of recovery in the market with a number of projects reportedly starting work on the paperwork that is necessary to begin issuing new CERs. He said there were also early signs that demand could recover on the back of reports that European nations such as Germany and France have exited the recession.

James Murray, BusinessGreen