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3. Players in the Market

CDM buyers are mainly private players concentrated in Europe and Japan. However, Europe totally dominated the CDM market with 86% of volumes transacted. The rest is mainly taken by Australia. On a country-specific share, UK dominates with about 50% market
share of volumes transacted which also catapults it to the leadership position as the carbon hub for the world.

Step II: Sales Strategy Based on Price Trends

1. CER Price Volatility

The past few years have seen a lot of volatility in pricing of carbon. It has been speculated that last year Europe allowed a mot of emission allowances, which reduced the demand for carbon credits, thereby plummeting the prices of the commodity.

Price Range

CER ranges from € 10-12 for 2008-12 delivery. These prices are down by € 3-4 compared to the pre-crash phase. For spot delivery, buyers are willing to pay up to € 16, against € 21.

The market price can be expected to be low in the near future due to two reasons: -

2. Short-Term Opportunityy

The Indian carbon market will witness a short-term rise in prices, in case of a severe European winter. This would be due to an increase in demand for carbon credits owing to greater energy consumption. This presents an opportunity for Indian sellers, India being the global market leader having already generated 29 million carbon credits and with another 139 million in the pipeline for sale.

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* Contributed by: -
Prateek Mathur & Pinky Singh,
MBA (2nd Year),
Faculty of Management Studies (FMS),
University of Delhi, Delhi.
Article posted on March 7, 2009.