"The carbon market is responding to the ratification of the Kyoto Protocol and to the beginning of operation of the European Union's emissions trading scheme," World Bank economist Franck Lecocq said on presentation of the study during a carbon trade fair in Cologne.

Further growth was extremely likely in the coming years, he said.

The EU's trading scheme, the mainstay of Europe's bid to meets its Kyoto targets on curbing greenhouse gas emissions, was launched in January. The Kyoto pact officially kicked in a month later.

The EU's "cap and trade" scheme imposes limits on CO2 emissions from about 12,000 factories and power stations. Firms exceeding their limits must buy extra permits from companies which have undershot their CO2 ceilings -- or face financial penalties.

Forward trading through brokers began ahead of the scheme's official launch. This year several energy exchanges have started up emissions trading platforms as they look to tap a potentially huge commodity market.

This year's increase in trade brings the total volume in the 18 months between January 2004 and March 2005 to 56 million tonnes, the World Bank's report showed.

Prices for European allowances have nearly tripled since January, trading on Wednesday at around 16.70 euros a tonne.

TIP OF THE ICEBERG

Brokerage Evolution Markets, which helped the World Bank collate its report, said current trading volumes were "just the tip of the iceberg".

Evolution's president Andrew Ertel said that of the 12,000 companies covered by the mandatory EU scheme, only 50 to 70 had started actively trading.

"We see new companies come in every single day...next year there may be several hundred million tonnes traded within the year," said Ertel.

Trading in project-based CO2 permits -- credits generated by emissions-reducing projects in developing countries -- so far in 2005 amounted to 43 million tonnes, the World Bank said.

Governments and companies buy the permits and use them towards meeting their CO2 reduction goals.

Brokerage Natsource, which also had input to the World Bank report, said project-based transactions grew by 38 percent in 2004 to 107 million tonnes.

The biggest European buyer of project-based permits was the Dutch government. The biggest private sector buyers were Japanese companies, Natsource research showed.