Carbon market growing while Korea makes plans

LONDON - To describe the London-based European Climate Exchange, a couple of descriptive phrases are needed. For starters, it’s the planet’s leading carbon exchange where 60 percent of global carbon credits are traded.

But the exterior of the ECX headquarters in London is better described as, well, nondescript. The headquarters does not have a big sign, and only five employees including the president work there. But ECX earned 3.1 billion won ($2.1 million) in operating profits based on sales of 9.4 billion won in the first half of this year, meaning each employee earned an average of 628 million won.

ECX’s future also seems rosy because of the global carbon market’s high potential.

The World Bank said the market is expected to grow to around $150 billion in 2010 from $10 billion in 2005. New Carbon Finance, a global research group, said the market will exceed $1 trillion by 2020.

In order to capitalize on this growth, BlueNext, the France-based carbon exchange, is expanding. It has hired 15 employees since it was acquired by the New York Stock Exchange in December 2007. A total of 24 people currently work for BlueNext, the No. 2 exchange.

While carbon trading is booming internationally, Korea has still not come up with specific plans to set up its own carbon exchange. To make matters worse, the Ministry of Environment and the Ministry of Knowledge Economy are arguing over guidelines for such an exchange. Fortunately, 19 local companies have applied for the United Nations’ clean development mechanism, or CDM, programs.

Certified emission reductions, or CERs, are traded after being earned through programs like CDM. Korea is expected to have about 146,000 tons of CERs in 2008, making it the world’s fourth-largest market after China, India and Brazil.

In a carbon exchange, countries and companies can trade certified emission reductions, or CERs, they earn from voluntary carbon dioxide emission reduction projects.

Under the Kyoto Protocol, industrialized countries are required to cut their emissions. So if one country fails to do so, it must purchase CERs, which are carbon credits authorized under the Kyoto Protocol, from other countries.