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Not so long back, Deutsche Bank were writing 50 page reports on the science of climate change. They paid for giant 70 foot high towers of doom counting carbon emissions near Madison Square Gardens. They were so concerned about the planet they had a division called Deutsche Bank Climate Change Advisors (DBCCA). They weren’t driven by money, of course, only by the science.
“…we at Deutsche Bank Climate Change Advisors (DBCCA) have always said that the science is one essential foundation of the whole climate change investment thesis.”
But the science must have changed for DB because now they don’t even turn up:
Banks, investors desert key carbon market event
BARCELONA, June 1 – Governments and voluntary offset sellers took centre stage at a major carbon market conference in Barcelona this week after banks and investors – previously amongst the biggest exhibitors at the annual event – skipped it, in part due to rock-bottom CO2 prices.
The annual Carbon Expo trade fair is seen by many as a barometer for investment and general sentiment in the global carbon markets, many of which are plagued with regulatory uncertainty and withering demand.
Big financial players that at one time had a large profile in the market, such as Deutsche Bank and Barclays, were once again absent after missing the event last year…
— (01 Jun 2013, Reuters Point Carbon, paywalled)
The CDM market is so sick (94% down), the UN says it needs $15bn to fix it
CDM stands for Clean Development Mechanism, another pointless bureaucratic label that tells you nothing. Essentially it lets Western nations assuage their guilt by sending money to China to pay for dirty factories to be shut down. People in China promise that they wouldn’t have done it without the funding. People in the West nod solemnly and write them another cheque. No free market in the world operates this way and for obvious reasons.
“Fearing low returns could force investors to abandon the scheme, the United Nations earlier this year commissioned a study into how much it would cost to buy up the credit surplus and keep the market functioning while nations have a second go at thrashing out a new global climate deal to succeed the Kyoto Protocol.
The study, published Tuesday by Vivid Economics, revealed that without fresh demand, 4.7 billion credits would need to be taken out of the system by 2020, potentially costing 11.7 billion euros ($15b USD) to lift prices to just 2.50 euros.
…
Since January, just 72 schemes have been registered, down 94 percent from more than 1,100 in the first five months of 2012, the U.N.’s data agency UNEP Risoe said last week.
” –Susanna Twidale, June 11th 2013, Reuters Point Carbon (paywalled)
That $15 bn would get the price (maybe) back to half way…
The Clean Development Mechanism could be called the China Development Mechanism since China has hosted half the schemes. Then again, the scheme has been beset with unintended consequences, and fraud, so Corruption Development could be the label of choice.
In one spectacular example, at least two Chinese plants were switched on and off especially to qualify for credits — the plants made HFC-22, which is a greenhouse gas and worse, produces the Godfather of Greenhouse gases, HFC-23, as a byproduct. It’s 11,700 times more potent than CO2, so the byproduct became more profitable than the original product. Or rather the absence of the byproduct, became the product, if you know what I mean. (My post back here explains it). In the end, these plants made more greenhouse gases than they would have had the CDM fake market not existed.
An EU vote will take place on July 3 to decide whether to support a weakened form of rescue of the carbon markets.
NZ carbon permits are stuck at record lows of $1.80.
h/t to Pat and to Scott the trader.