Carbon markets are booming in 2017, with prices on average rising by 3.6% year-over-year and rising at an annual rate of more than 6% over the past 12 months.
The market, which is largely dominated by China, is buoyed by a recent decision by the European Union (EU) to lift its emissions trading scheme to include all new vehicles sold in 2018.
In November, Tesla Motors Inc. (TSLA) and Fiat Chrysler Automobiles NV (FCAU) announced a merger and the combined company will buy rival General Motors Co. (GM).
The deal will also lead to the merger of Fiat Chrysler’s U.S. operations.
The global market for carbon credits, which are often sold to buyers as an alternative to diesel fuel, is up nearly 30% in 2017 over 2016, according to Bloomberg New Energy Finance data.
The United States is also a strong exporter of carbon credits.
Last year, the U.K. exported more than 3 billion tons of carbon dioxide, or 6% of the global total, according the International Energy Agency (IEA).
The U.N. has also called for a carbon tax, although it is unlikely to pass in the near term.
A U.G. and U.A.F. summit on climate change last year ended without a decision on a carbon price.
The U, S. and European Union will also continue to introduce a carbon market next year, as they did in 2018, when the European Commission adopted a proposal for a global carbon market.
The markets are also expected to continue to expand in 2018 due to a $1 trillion market in carbon credits sold to households, businesses and the global economy.
While the U and S. markets have seen record prices in 2017 due to higher prices for natural gas and oil, prices in China have dropped significantly, reflecting the country’s transition to a cleaner economy.
The Chinese government announced plans to cap carbon dioxide emissions at 40% below 2005 levels by 2030.
“The world is going to get a lot more carbon emissions into the atmosphere than we ever had in the past, but we’re going to have a lot less of them,” said Matti Møller, head of global energy strategy at Bernstein Research.
“We’re seeing more growth in the carbon market as a result of China’s shift to a green economy, as well as a lot of other things that are driving the market.”