By 2010, the inflows into the Carbon Markets would increase to that received by the SENSEX.

Carbon Market

 The CDM market is like any other commodity market. The CDM market is rising sharply and is getting matured with time. Currently, it is the second largest carbon market after the EUA market. The market is nearly doubling every year.

Majority of the trading is done in the Primary market and is mostly OTC (Over The Counter) type. The secondary market has not yet expanded as much as the primary market mainly because of the high volatility of the carbon prices.

The CER market is an evolving market and has not yet become matured enough to be completely independent. The CER market is closely linked to EUA market. Thus the volatility of EUA market is inherently transferred to the CER market. Fluctuations in EUA market cause price fluctuations in CER market.

The Buyers of CERs can be broadly classified into

• Compliance Buyers (Annex I countries who have got emission reduction targets under the Kyoto Protocol)
• Carbon Funds (e.g. Prototype Carbon Fund of World Bank)
• Traders
  

European buyers majorly dominate the CER market, with UK leading the way. Japan is the second largest buyer followed by others. With Australia ratifying the Kyoto Protocol, gates have opened up for a giant market that would serve to foster more opportunities for profit in the international carbon trading game. The success of Bali conference has also set in motion a process that will define the structure of carbon markets for decades to come. It is estimated that a global carbon market worth EUR 240 - 450 billion would be created by 2020.

In the wake of the first commitment period, we already see countries like Canada and Japan not able to meet their targets. This only serves as an indicator that as the first commitment period advances, the CER prices will show an upward rise. India is a big market for CDM projects and is the second most attractive destination for CDM project participants. In other words, India has a good climate for investment in CDM projects. In the registered projects category, India has the largest share in the pie-32%.  However, In the issued CER category, India ranks second after China.

CERs Issued:	Projects Registered:

The total number of projects registered till March 2008 was 1053 and the total number of CERs issued were 133 million. However, the registration process is getting more and more stringent lately mainly to safeguard the mechanism’s integrity and the quality of CERs.