Certified emissions reductions issued through the clean development mechanism programme will be in short supply by the end of 2012, when the Kyoto Protocol will expire, carbon market intelligence firm Point Carbon predicts in a report.

Continued strong demand for those emissions offsetting units in Europe's carbon market would translate into robust prices for the rest of the period, ensuring a healthy trading environment, the report suggests.

Analysts were confident that while the economic slowdown would affect the supply side and potentially push up the price of carbon that the demand side had experienced little change, even in the face of severe economic downturn.

Rand investors in South Africa had until October 21 to invest in the carbon credit note, which would give investors direct exposure to the carbon market, and to the euro. Investors could take an unlimited amount of rands offshore until 2012, and get a euro exposure in a market, which was increasingly being seen as a safe haven.

The market for carbon credit arose in 1997 as part of the international Kyoto Protocol on the reduction of environmentally harmful emissions. Point Carbon states that carbon credits allowed companies in developed countries, which were struggling to meet stringent emission reduction targets in the first commitment period of the Kyoto Protocol, to buy credits from countries that polluted less than their allotted limits.

Failure of governments and companies to meet these targets would result in penalties.

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