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. Last Updated: 07/27/2016

Carbon Market Seen Worth $10Bln by '07

LONDON -- The emerging global market in carbon emissions will soar to be worth $10 billion by 2007 even if the United Nations Kyoto Protocol fails, analysts said on Friday.

The UN pact on climate change, which envisages global trading, still relies on being ratified by a wavering Russia, after the world's biggest polluter the United States pulled out of the deal.

But Oslo-based consultancy Point Carbon said international trading would take off from 2005 when the European Union will impose caps on industry emissions of carbon dioxide, blamed for contributing to global warming.

"The lion's share of the market will be from the EU scheme, with the rest mostly coming from investments in projects in developing countries," analyst Atle Christiansen of Point Carbon said.

"This doesn't hinge on the Kyoto Protocol entering into force, but that would affect future investment in emissions reduction projects," he added.

International officials meeting in Milan on Thursday to discuss details of the Protocol said carbon trading would soar under the pact but could still double in 2004 with Kyoto on hold.

The pact needs Russia to sign, as this would allow the treaty to represent at least 55 percent of industrial nations' emissions.

Confusion over Russia's position on the Protocol grew on Thursday as the Kremlin and the Economic Development and Trade Ministry clashed over the issue. A Kremlin advisor called the pact unacceptable earlier this week but the ministry said the government intended to ratify.

The European Union scheme will still go ahead even if the Protocol does not enter into force. The EU agreed to cut its emissions by 8 percent of 1990 levels by between 2008 and 2012 under the pact, and will require industries to meet targets on reducing their carbon emissions.

Companies that exceed their targets will gain credits to sell, while those missing the caps will be forced to buy credits to pollute. Forward EU trades for 2005 have already started, with power plants, oil refiners and manufacturing companies among the biggest industrial producers of emissions.

Trading would increase further under Kyoto as the pact allows countries to gain Clean Development Mechanism credits by investing in energy efficiency or renewable energy projects that reduce emissions overseas, where investment costs may be cheaper.

"Companies from Japan are expected to play a major role in the CDM [project] market, and Canadian companies are likely to be there as well," Point Carbon said.

A World Bank study released Thursday said worldwide trading of greenhouse gas emissions had more than doubled over the last year to about 71 million tons in volume and was estimated at a value of more than $200 million this year.