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Global Carbon Trading System Has “Essentially Collapsed”

Posted By Joanne Nova On September 16, 2012 @ 1:14 am In Global Warming | Comments Disabled

When is a free market not free? When it doesn’t do what the bureaucrats wanted it to “freely do”. There is a message from this-pale-shadow-of-a-global-carbon-free-market and it’s telling us that carbon (dioxide) should be free, as in $0, no cost, no fee, no tax.

CDM’s (Clean Development Mechanisms) were set up in 1997 with Kyoto. It is separate from the EU market, and is one of the only “global” carbon markets.


Global carbon trading system has ‘essentially collapsed’

The UN clean development mechanism, designed to give poor countries access to green technologies, is in dire need of rescue

, environment correspondent

The world’s only global system of carbon trading, designed to give poor countries access to new green technologies, has “essentially collapsed”, jeopardising future flows of finance to the developing world.

Billions of dollars have been raised in the past seven years through the United Nations‘ system to set up greenhouse gas-cutting projects, such as windfarms and solar panels, in poor nations. But the failure of governments to provide firm guarantees to continue with the system beyond this year has raised serious concerns over whether it can survive.

Governments have a last chance to restore confidence in the system when they meet in Qatar this December to discuss climate change. But few participants hold out any hope that they will agree to toughen their 2020 emissions targets, which are scarcely even on the agenda. Instead, governments are focusing on drawing up a new climate change treaty by the end of 2015, which would stipulate emissions cuts for the period after 2020.

But the recession and Eurozone crisis …  has combined to bring about a collapse in the price of UN credits, from highs topping $20 (£12.50) before the financial crisis to less than $3 each today. At such rates, many potential projects are not commercially viable. Financiers and project developers have abandoned the market in droves.

Failing government intervention the EU scheme is toying with a death-spiral:

The Australian:  UN-sponsored international offsets, also known as Kyoto credits or by their formal name of certified emission reductions (CERS), plunged below 2 for the first time last week in the wake of further disappointment in international climate talks.

HSBC said even if agreement could be reached on key abatement targets and the future of Kyoto, the thorniest problem was what to do with a massive overhang of 13 billion units given to Russia, Ukraine, Poland and other central and eastern European countries. It said these had the potential to cancel out any emission reductions agreed to in the next phase of Kyoto, and would further drive down carbon prices.

“After almost seven years of talks, no obvious solution has emerged that can please the ‘hot air’ holders,” the HSBC report said. And it feared that if any agreement was reached, it would likely be symbolic with so many loopholes that its impact would be effectively neutered.

Bloomberg New Energy Finance said the situation had become so dire that its forecast for the long-term price of Kyoto credits had been cut to just 1.10, just enough to cover the marginal cost of operating, monitoring, verifying and issuing CERs out to 2020. Despite this, there are a further 100 million credits in the pipeline that will be issued before the end of this year.


No one should have to pay to emit a harmless plant fertilizer that — in a worst case scenario –  produces a small amount of warming — warming that most likely would save more lives than it would cost.


H/t Climate Depot, Redmond @ Mises, and Scott the energy trader.

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