India has emerged as the second largest seller of carbon credits in the global market with six per cent share in 2007, while China tops the list with a huge 73 per cent, a World Bank report said.
"India and Brazil, at 6 per cent market share each, transacted the highest volumes after China in 2007," said the report 'State and trends of the carbon market 2008'.
Certified emission reduction (CER), that are traded on the global climate exchanges, are carbon credits issued by the Clean Development Mechanism (CDM) Executive Board for emission reductions achieved by CDM projects and verified under the rules of the Kyoto Protocol.
Pointing out that high price expectation for CERs in India and Brazil is hindering growth, the report said the sellers in these two nations favour sale of already issued CERs in the range of 15-16.50 pound per CER instead of selling forward CER streams.
For the third consecutive year, China was the world leader in CER supply with a 73 per cent market share in terms of volumes last year against 54 per cent in 2006.
Citing reasons for China still being the destination of choice for buyers of credits, the report said "the large size, economies of scale in origination, and its favourable investment climate " have attracted investors.
"China consolidated its position as the pre-eminent carbon supplier, by quadrupling its number of projects in the pipeline from January 2007 to March 2008," it said.
China is well ahead of other nations in the CDM pipeline with 53 per cent of potential CER supply with 1,104 projects till 2012, compared to India's 15 per cent of the total CDM pipeline, it noted.
The carbon market is the most visible result of early regulatory efforts to mitigate climate change.