Europe still dominates the US$60 billion carbon trading market worldwide, but as North America begins to catch up and growth around the world takes off, the carbon trading market is set to double in value this year alone, a panel of industry experts said Tuesday.

The panel gathered at the Toronto Stock Exchange to discuss the state of carbon markets, a day ahead of the third annual Business of Climate Change Conference that will take place on Wednesday.

Growth in global trading so far has been driven by the European Union, where its Emissions Trading Scheme—the largest multi-country, multi-sector Greenhouse Gas emission trading scheme worldwide—kicked off in 2005.

The success of the system is largely thanks to legally binding emissions reduction targets on the participating countries, and once similar requirements kick in among more countries around the world, the growth prospects for the carbon trading market are massive, the panelists said.

Already in the first half of 2008, exchanges that are part of the Chicago Climate Exchange group experienced volume growth between 150% and 250% over the same period last year, said Rob McAndrew, vice-president of business and markets development at Chicago Climate Exchange.

“We’ve seen significant growth in all our exchanges,” said McAndrew.

He said the European market for carbon trading is worth roughly US$80 billion, while the potential U.S. market under the proposed Lieberman Warner Climate Security Act could reach as much as US$240 billion.

While the development of carbon trading markets in North America largely depends on the outcomes of the federal elections in both Canada and the United States, progress so far in Canada is promising, said Corinne Boone, managing director of CantorCO2e, an emissions trading broker company with headquarters in London and San Francisco.

She pointed to Alberta launching the first provincially legislated greenhouse gas trading system in July 2007, and the emergence of the Montreal Climate Exchange.

In addition, she said many large emitters are already purchasing carbon credits in preparation for compliance with Canada’s domestic offset system, for which a number of protocols are being developed currently.

“We are going to live in Canada and in the United States in a carbon constrained community and it’s a matter of when, not if,” Boone said.

The voluntary market for carbon reduction in Canada, however, is very minimal, according to Boone. “Most of the voluntary market activity that is taking place in North America is in the United States,” she said.

The carbon market has proven itself to be relative resilient in the wake of recent market turmoil. Although the price of carbon was hit by the recent turbulence, the drop in compliance-based markets has since recouped all the losses it incurred, said Henry Derwent, president and CEO of the International Emissions Trading Association. He pointed to today’s price of 23.65 euros, which is up 35 cents from its Oct. 2 price of 23.30 euros.

“It’s a compliance market, it’s not voluntary,” Derwent said. “The fundamentals of supply and demand are driving this market.”

Boone agreed that companies involved in the carbon-trading realm will likely be hit less hard than others during this financial crisis. “Just because the markets have changed doesn’t mean that the environmental regulations are going to change,” she said.

Derwent said carbon prices in the voluntary market have been hit harder by the financial turmoil, since purchases as part of companies’ social responsibility practices have been cut back by companies facing financial difficulties.

Still, Derwent said the carbon market is resilient: “On the whole, this is a market that has withstood the turmoil in the past couple of weeks,” he said.