Chances of a Cap

The recession and cheap oil are battering the European carbon trading market, according to the New York Times:

Fears that the global economic slowdown will hobble efforts to fund a green transformation of energy systems seem to be well founded.

Governments are putting plans aimed at mitigating carbon dioxide emissions on hold at a time when concerns are focused on finance rather than ecology and when the collapsing price of oil and gas is undermining incentives to invest in renewable energy.

Another blow to the sector is the tumbling price of permits for emitting carbon dioxide, the main greenhouse gas. In countries where emitters must buy these permits, like those in the European Union, low prices mean emitters have fewer incentives to make their production process more efficient or move to less greenhouse gas intensive fuels.


source: NY Times Green Inc. blog


The price of these permits has fallen by more than half since mid-2008 and were trading at 11.63 euros (about $15) by early afternoon on Wednesday, according to Point Carbon.

The slumping price signals something else: The market already has considered the prospects for America joining Europe's carbon cap-and-trade scheme, and it doesn't believe it. Neither do I.

(via CCNet News (email only))