EU carbon trade market seen worth billions of euros
The EU will launch the world's first international greenhouse gas trading scheme in 2005 as part of efforts to fight global warming.
The scheme will cap the amount of carbon dioxide (CO2) that big factories and power stations can emit from 2005 and allow them to trade emissions rights with other firms in the 15-nation bloc.
"The overall costs of emission reduction will come down substantially when companies are provided with the opportunity to trade allowances, instead of having to rely solely on in-house reduction options," said Rolf de Vos, editor of the report.
Emissions trading is key to the EU's drive to cut greenhouse gases to eight percent below 1990 levels by 2012, required under the United Nations' Kyoto Protocol on global warming.
The report, "Corporate Carbon Strategies Outlook to 2012" published by Reuters Business Insight, bases its estimate of the annual value of the market on CO2 prices of around five euros a tonne in 2005, rising to more than 20 euros a tonne in 2012.
It estimates the emissions market could be as large as 90 million tonnes a year.
Prices and volumes could be higher if early links are established by the Japanese and Canadian carbon trading markets and if a carbon derivatives market is established, said the reports.
However, it warns prices and volumes could be lower if companies invest mainly in in-house pollution reduction rather than in emissions trading.
Some trading has already taken place on a Europe-wide level.
In February, Shell (RD.AS) (SHEL.L) and Dutch firm Nuon carried out the first forward trade under the EU scheme. Both firms have plants which will be subject to emissions caps.