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UN $315 billion CDM carbon market comatose after Warsaw. It may last years

More good news.

Burning carbon credits, dollarsThe CDM is one of the only truly global carbon markets. It’s been the main mechanism for “mitigation” in developing countries, (China says “thank you”). Born with the Kyoto agreement, it was in a sick state last year and was even said to have collapsed. Now however it’s reached a state of “coma”.

Each CDM was worth 20 euros in 2008. Now they are selling for 50c.

Reuters: Investment under the U.N.’s $315 billion Clean Development Mechanism (CDM) has ground to a halt as the value of the credits they generate has plunged 95 percent in five years to around 0.30 euros, crushing profits that investors count on to set up carbon-cutting schemes in the developing world.

“As a tradable commodity, it’s in a coma and will be unless and until a 2015 agreement wakes it up,” said Jorund Buen, co-founder and partner at consultancy and project developer Differ.

A lot of things could be said about the last UNFCCC meeting in Warsaw. Here’s the one that matters:

“…no major nation offered to set or deepen emission targets, while Japan scaled down its 2020 goal.”

The language of death:

“…almost 200 nations “expressed concern” over the state of the CDM market, but measures that could have helped prop up the scheme were removed…”

There’s a paltry rescue effort which only makes it look more sick, and more pointless:

“In the absence of new targets, several European nations firmed up pledges in Warsaw to pay a premium over market rates for a handful of CDM projects in the world’s poorest countries to keep the scheme alive.”

Norway’s governmentĀ  is sending $30m of taxpayer funds to buy CDM credits. Lucky UK Taxpayers are tossing in 50 million pounds. Do I read this correctly — of the 50 million, only 33 is going to buy of the credits, the other 17millionĀ  is going to train people on getting through UN red tape. Those compliance costs… really? And people call this a “free” market.

“The report said 33 million pounds would be spent directly on the credits, with prices negotiated with each developer. Most of the remaining funding will be spent on programmes to help developers get their projects through the complex auditing process required by the UN before credits can be issued.”

But baby carbon markets are starting in places like South Korea and Mexico and there is still hope (apparently). Point Carbon’s Frank Melum said”For the most optimistic, this is the first sign of a life for CDM after 2020.” Which tells you how bad it is doesn’t it? 2020.

If you have the urge to see how big the CDM is compared to the global markets, the graph is here — though like most carbon market things, no one seems to have updated the graphs to show the downturn in the last couple of years.

h/t GWPF

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