The Carbon swindle
Seems to have hit a bubble here -- the politicians are pushing for Carbon Offsets all the while heavily investing in companies that manage said offsets -- All Gore is a prime offender (
here,
here,
here,
here,
here and
here)
This seems like a real moneymaker as the price of stuff keeps going up -- right?
Wrong -- from
The Australian:
Carbon crash hits Europe's emission trading scheme
While you were distracted by crashing banks and clashing US senators, you may have missed a small environmental earthquake.
The price of carbon has collapsed.
In only three months, life has become a lot cheaper for polluters. The financial cost of warming the planet has plummeted in Europe's emissions trading system (ETS) and the effectiveness of such a volatile market mechanism in curbing carbon is being questioned.
You may recall that the ETS is a mechanism to encourage businesses to reduce their carbon output. Europe's larger companies are allocated permits to emit CO2, and these allowances, called EUAs, can be traded on exchanges.
Companies that emit less CO2 than their allocation can sell EUAs for cash, but inefficient polluters must buy EUAs or face financial penalties.
The idea is that a shortfall in EUAs allocated by governments will cause the carbon price to rise, stimulating investment in carbon reduction.
It's a market solution to pollution, but this carbon market is showing a distressing tendency to behave like most financial markets -- hysterically. In July, the right to spew out one tonne of CO2 from a chimney would have cost a power generator E29.33, but yesterday it could be bought for only E18.25 ($34.14).
The sudden collapse of the carbon price mirrors the rout in the wider commodity markets. Carbon peaked in July, its price summit occurring within 10 days of the peak in the crude oil price.
Since then, everything from steel to potash has been tumbling and you might think it unsurprising that carbon has tracked the general retreat. Hedge funds and other financial investors dabbled in EUAs as they fiddled with palm oil and soya.
Heh -- gotta love it. The Eurocrats think that they can meddle with this and the force of the market undoes their work as if they never tried.
Idiots!
Posted by DaveH at November 11, 2008 2:44 PM