That would make up a hefty 82 percent of the world's carbon emission trading value, Point Carbon wrote in an outlook for the report. One reason for that is that prices have more than tripled since January.

The financial might in the fledgling market is driven by Europe's commitments since February to cut emissions of heat-trapping greenhouse gases under the international Kyoto Protocol, and regulations forcing companies to comply with targets, IETA President Andrei Marcu said.

"What it says is the market can be considered as delivering," Marcu told Reuters.

The objectives were to take concrete steps to reduce global warming, help companies and countries meet obligations and promote sustainable development, he said.

"What I would say is it is succeeding on a very important dimension, and that is cultural change. Companies in Europe that are covered right now by the emission trading scheme have a different behavior without any doubt," Marcu said. "They are factoring the price of carbon in their business decisions."

Under the scheme, which limits emissions from about 11,500 manufacturing plants and power stations, European governments issue carbon dioxide allowances, which are sold into the market by firms emitting below their limits then traded.

A program called the clean development mechanism allows companies to also invest in environmentally friendly projects in developing countries to earn credits at home.

US TRADING LIGHT

Trading has started in the United States, but volumes and prices pale in comparison to those in Europe, the report said.

It projected an EU average price for 2005 of as much as 20 euros per tonne of emissions, versus a first-half price of $1.65, or the equivalent of 1.4 euros at the Chicago Climate Exchange. Prices in the EU market were 19.65 euros per tonne on Wednesday.

The contrast won't become any less stark with Washington having rejected Kyoto and any targets or caps on emissions, which set the market price, said Douglas Russell, a managing director of Natsource LLC, a big financial player in emission trading.

"I can't see how it can. I don't think there's going to be enough (volume)," said Russell, a former climate negotiator with the Canadian government.

He pointed out several US Northeast states are working toward their own cap and trade system over the next few years, but that will not come close to the European system.

Officials said, however, today's US market is important for several players, including multinational companies aiming to standardize environmental practices throughout their organizations, such as Royal Dutch Shell Plc and BP Plc.

Others may be looking reduce emissions under the US Clean Air Act or learn about the market, they said.