The burgeoning strength of the global carbon market was again underlined today, after the World Bank released a major new study claiming the market more than doubled in size last year to $64bn.

The report found that the growth of the market was primarily driven by the success of the European Emissions Trading Scheme, which saw a doubling in value to $50bn.

However, the study also revealed a levelling off in the expansion of the UN's Clean Development Mechanism (CDM), raising fresh concerns that the initiative for funding the development of low carbon projects in developing economies through the sale of carbon credits is losing momentum.

The report found that the volume of trades completed under the CDM rose just 2.6 per cent in 2007 to 551m tonnes of CO2 equivalent. It also claimed that the growth of the market was being hampered by procedural delays that have resulted in over two thirds of the 3,000 CDM projects so far submitted not yet completing the approval cycle and warned that demand for CDM carbon credits could drop off in the run up to a post 2012 international agreement on climate change being reached.

Karan Capoor, lead author of the State and Trends of the Carbon Market Report 2008, warned that urgent action was required to reinvigorate the CDM market. "At a time that global co-operation to reduce the risk of climate change is more important than ever before, the prospects for developing countries benefiting from the carbon market are in question," he said. "It would be a shame for the world to lose this momentum now."

Experts advised that alongside attempts to streamline the approval process for CDM projects, the global carbon market also requires clearer signals from policy makers on the nature of the legislative framework post-Kyoto if it is to continue its rapid growth.

"Carbon trading market data in 2007 reflects the ability of market mechanisms to mobilise capital to address climate change," said Jack Cogen, chief executive of Natsource LLC, a leading emissions and renewable energy investment bank. " [But] in order to continue market growth and investment in clean energy, policy-makers need to send the project development and buying sectors a clear signal that these mechanisms will continue to be an important policy tool in the post-2012 policy framework to address climate change and improve their performance."

Echoing this sentiment, a survey released today by trade group the International Emissions Trading Association (IETA) confirmed that confidence in the market has slipped slightly in the past year.

The survey of over 100 participants in the carbon market found that the index representing confidence in the sector fell from 79 per cent in April 2007 to 73 per cent a year later. However, it also noted that overall confidence in the market remained strong with the majority of respondents predicting a global carbon market would be established in the next 10 years and over half expecting the volume and price of carbon credits to continue to expand up to 2012 and beyond.