RPT-Voluntary CO2 market tripled to $331m in '07-report

COLOGNE, Germany May 8 (Reuters) - An unregulated trade in emissions permits which allows companies and individuals to offset their carbon footprints more than tripled to $331 million in 2007, a report said on Thursday.

Accusations of poor quality have frequently plagued the voluntary carbon market, which is booming nevertheless as corporations and people try to cut their contribution to global warming or improve their public image.

The volume of traded offsets was equivalent to cuts of some 65 million tonnes of carbon dioxide (CO2) emissions last year, more than the annual greenhouse gas emissions of Norway, up from 25 million tonnes worth $97 million in 2006, according to a report by analysts Ecosystem Marketplace and New Carbon Finance.

Voluntary offset prices varied drastically in 2007, ranging from $1.62 to some $300 a tonne of CO2, with an average of $6.10 paid. This is up 49 percent from the $4.10 a tonne average seen the year before.

"The market value has even grown stronger than absolute volumes as buyers are willing to pay more for their offsets," said Milo Sjardin of New Carbon Finance.

"Relative to 2006 the market value has grown by 240 percent, which is significantly higher than even the regulated markets."

Regulated carbon emissions markets, which do not include the voluntary emissions reduction credits, or VERs, doubled in value last year to $64 billion, according to a World Bank report published on Wedesday. [ID:nL07301018]

Voluntary offset transactions are divided into two main markets, the U.S.-based Chicago Climate Exchange and those sold by brokers, retailers, or the offset's project developers, in the so-called over-the-counter market.

These markets accounted for $72 million and $258 million respectively in 2007.

Offsets sourced from Asian projects made up 39 percent of volumes sold in 2007, whereas African projects lost ground, accounting for only 2 percent of the market, down from 6 percent in 2006. North America was home to some 27 percent of the projects. The report, entitled State of the Voluntary Carbon Markets 2008, was published on the sidelines of a carbon conference in Germany. This report will be available shortly on www.reutersinteractive.com (Reporting by Michael Szabo; Editing by Gerard Wynn)