Average prices on the project-based market rose from about $7.00 per tonne in 2005 to $10.50 per tonne in the first three-quarters of 2006. However, average prices mask a range that varies based on risk factors related to the project.

While the carbon market and pricing may at first appear homogeneous transactions are based on three main pillars: the volume of emission reductions transacted; the length of the purchasing period; and the price per emission reduction. Projects with similar technologies may carry different risk profiles that are linked to the host country or project developer. Prices therefore vary significantly and are negotiated on a case-by-case basis according to the specific risks inherent in a given project. How these risks are managed and how risks are shared between the seller and buyers have a significant impact on the overall contract value and structure. Some risks are within the control of the project developer or host country.