Tag Archives: Carbon Trading

Investor heavyweights call for clear action on climate

As a major UN climate summit gets under way in New York today, some of the world’s leading institutional investors demand clearer policies on climate change and the phasing out of fossil fuel subsidies. LONDON, 23 September, 2014 − Many of the biggest hitters in the global financial community, together managing an eye-watering $24 trillion of investment funds, have issued a powerful warning to political leaders about the risks of failing to establish clear policy on reducing greenhouse gas emissions. More than 340 investment concerns − ranging from Scandinavian pensions funds to institutional investors in Asia, Australia, South Africa and the US − have put their signatures to what they describe as global investors’ most comprehensive statement yet on climate change. In particular, the investors call on government leaders to provide a “stable, reliable and economically meaningful carbon policy”, and to develop plans to phase out subsidies on fossil fuels. They warn: “Gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions.

Ambitious policies

“Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments.” Attempts to establish carbon pricing systems capable of making an impact on climate change have so far ended in failure, while oil and gas companies continue to battle against stopping fossil fuel subsidies. The investors’ move has been welcomed by the United Nations. Achim Steiner, head of the UN Environment Programme, said: “Investors are owners of large segments of the global economy, as well as custodians of citizens’ savings around the world. Having such a critical mass of them demand a transition to the low-carbon and green economy is exactly the signal governments need in order to move to ambitious action quickly. “What is needed is an unprecedented re-channelling of investment from today´s economy into the low-carbon economy of tomorrow.” The investors’ statement comes amid growing concern in the finance sector about the economic consequences of a warming world. Last week, a commission composed of leading economists and senior political figures said the transition to a low-carbon economy was vital in order to ensure continued global economic growth.

Stranded assets

Other groups say investors who continue to put their money into fossil fuels are taking considerable risks. As governments and regulators face up to the enormity of climate change and place more restrictions on fossil fuels, such investments could become what are termed “stranded assets”. There are also signs of a surge in low-carbon technologies, particularly in the renewable energy sector. Last week, Lazard, the asset management firm, reported that a decline in cost and increased efficiency means large wind and solar installations in the US can now, without subsidies, be cost competitive with gas-fired power. There is also increased activity on the carbon pricing front. China, the world’s biggest emitter of greenhouse gases, recently announced it would establish a countrywide emissions trading system by 2016. If implemented, the China carbon trading system will be the world’s biggest. The country already runs seven regional carbon trading schemes. – Climate News Network

As a major UN climate summit gets under way in New York today, some of the world’s leading institutional investors demand clearer policies on climate change and the phasing out of fossil fuel subsidies. LONDON, 23 September, 2014 − Many of the biggest hitters in the global financial community, together managing an eye-watering $24 trillion of investment funds, have issued a powerful warning to political leaders about the risks of failing to establish clear policy on reducing greenhouse gas emissions. More than 340 investment concerns − ranging from Scandinavian pensions funds to institutional investors in Asia, Australia, South Africa and the US − have put their signatures to what they describe as global investors’ most comprehensive statement yet on climate change. In particular, the investors call on government leaders to provide a “stable, reliable and economically meaningful carbon policy”, and to develop plans to phase out subsidies on fossil fuels. They warn: “Gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions.

Ambitious policies

“Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments.” Attempts to establish carbon pricing systems capable of making an impact on climate change have so far ended in failure, while oil and gas companies continue to battle against stopping fossil fuel subsidies. The investors’ move has been welcomed by the United Nations. Achim Steiner, head of the UN Environment Programme, said: “Investors are owners of large segments of the global economy, as well as custodians of citizens’ savings around the world. Having such a critical mass of them demand a transition to the low-carbon and green economy is exactly the signal governments need in order to move to ambitious action quickly. “What is needed is an unprecedented re-channelling of investment from today´s economy into the low-carbon economy of tomorrow.” The investors’ statement comes amid growing concern in the finance sector about the economic consequences of a warming world. Last week, a commission composed of leading economists and senior political figures said the transition to a low-carbon economy was vital in order to ensure continued global economic growth.

Stranded assets

Other groups say investors who continue to put their money into fossil fuels are taking considerable risks. As governments and regulators face up to the enormity of climate change and place more restrictions on fossil fuels, such investments could become what are termed “stranded assets”. There are also signs of a surge in low-carbon technologies, particularly in the renewable energy sector. Last week, Lazard, the asset management firm, reported that a decline in cost and increased efficiency means large wind and solar installations in the US can now, without subsidies, be cost competitive with gas-fired power. There is also increased activity on the carbon pricing front. China, the world’s biggest emitter of greenhouse gases, recently announced it would establish a countrywide emissions trading system by 2016. If implemented, the China carbon trading system will be the world’s biggest. The country already runs seven regional carbon trading schemes. – Climate News Network

Carbon trading slides again

FOR IMMEDIATE RELEASE Carbon trading has been lauded by some as a key way to cut back on climate-changing greenhouse gas emissions. Trouble is, the market has been stuck in the doldrums for years. LONDON, 4 January – The performance of the world carbon market continues to disappoint. According to the latest figures from Thomson Reuters Point Carbon, a specialist group analyzing carbon market activity, a total of €38.4 bn worth of carbon allowances and credits was traded last year – a decline of nearly 40% on the 2012 figure. The value of trading in the market has now declined for three years in a row – in 2011 trades were valued at €96 bn. 2013 also saw the volume of emissions units traded around the world drop for the first time since 2010. “The main explanation for the falling prices in carbon markets around the world is the very modest emissions reduction targets adopted for the period up to 2020”, says Anders Nordeng, senior carbon analyst at Point Carbon. “Without ambitious climate targets there is no need for deep emission reductions and carbon prices will remain at low levels.“

Too cheap to work

The EU’s Emissions Trading System (ETS) dominates the world’s carbon trading, accounting for 94% of the market’s total value and 88% of the volume of emission units traded. The scheme, which has been in operation since 2005, was set up with the aim of reducing CO2 emissions by requiring companies such as energy suppliers and other industrial conglomerates to pay for their emissions through the buying and selling of allowances or “pollution permits.” Initial market mismanagement resulted in a chronic over-supply of tradeable permits. In recent years Europe’s economic crisis lessened economic activity and reduced the demand for allowances. Allowances, based on the market price of a tonne of carbon, are now trading at around the €5 mark though at one stage in 2013 the price dropped to under €3.  Market analysts say a price of at least €25 is needed in order to persuade companies to decarbonise and for carbon reduction targets to be achieved. Point Carbon says it’s not all gloom in the market. While the ETS continues to underperform, other carbon markets are developing. Trading in North America, driven by activity in California, in north-eastern states in the US and Quebec in Canada, grew both in value and volume last year.

Chinese potential

“2013 was the year the North American carbon markets blossomed”, says Olga Chistyakova, a Point Carbon analyst. China is also stepping up carbon trading, having launched the first of seven proposed regional trading schemes in mid-2013. “Although the traded volumes are still modest, the sheer size of some of the covered provinces and cities (Guangdong, Beijing, Shanghai) points to a great potential”, says Point Carbon. Meanwhile, the ETS has undergone some limited changes aimed at shoring up carbon prices. After months of wrangling between states, the sale of 900 million ETS allowances has been postponed. And what’s billed as a comprehensive structural reform of the ETS is due to be announced in mid-January. There are also signs that the corporate sector, particularly in the US, is adopting carbon trading as part of business strategy. A recent survey by the Carbon Disclosure Project found that many large US corporations are setting their own internal carbon pricing in anticipation of future environmental legislation and to assess the value and risk of various investment projects. – Climate News Network

FOR IMMEDIATE RELEASE Carbon trading has been lauded by some as a key way to cut back on climate-changing greenhouse gas emissions. Trouble is, the market has been stuck in the doldrums for years. LONDON, 4 January – The performance of the world carbon market continues to disappoint. According to the latest figures from Thomson Reuters Point Carbon, a specialist group analyzing carbon market activity, a total of €38.4 bn worth of carbon allowances and credits was traded last year – a decline of nearly 40% on the 2012 figure. The value of trading in the market has now declined for three years in a row – in 2011 trades were valued at €96 bn. 2013 also saw the volume of emissions units traded around the world drop for the first time since 2010. “The main explanation for the falling prices in carbon markets around the world is the very modest emissions reduction targets adopted for the period up to 2020”, says Anders Nordeng, senior carbon analyst at Point Carbon. “Without ambitious climate targets there is no need for deep emission reductions and carbon prices will remain at low levels.“

Too cheap to work

The EU’s Emissions Trading System (ETS) dominates the world’s carbon trading, accounting for 94% of the market’s total value and 88% of the volume of emission units traded. The scheme, which has been in operation since 2005, was set up with the aim of reducing CO2 emissions by requiring companies such as energy suppliers and other industrial conglomerates to pay for their emissions through the buying and selling of allowances or “pollution permits.” Initial market mismanagement resulted in a chronic over-supply of tradeable permits. In recent years Europe’s economic crisis lessened economic activity and reduced the demand for allowances. Allowances, based on the market price of a tonne of carbon, are now trading at around the €5 mark though at one stage in 2013 the price dropped to under €3.  Market analysts say a price of at least €25 is needed in order to persuade companies to decarbonise and for carbon reduction targets to be achieved. Point Carbon says it’s not all gloom in the market. While the ETS continues to underperform, other carbon markets are developing. Trading in North America, driven by activity in California, in north-eastern states in the US and Quebec in Canada, grew both in value and volume last year.

Chinese potential

“2013 was the year the North American carbon markets blossomed”, says Olga Chistyakova, a Point Carbon analyst. China is also stepping up carbon trading, having launched the first of seven proposed regional trading schemes in mid-2013. “Although the traded volumes are still modest, the sheer size of some of the covered provinces and cities (Guangdong, Beijing, Shanghai) points to a great potential”, says Point Carbon. Meanwhile, the ETS has undergone some limited changes aimed at shoring up carbon prices. After months of wrangling between states, the sale of 900 million ETS allowances has been postponed. And what’s billed as a comprehensive structural reform of the ETS is due to be announced in mid-January. There are also signs that the corporate sector, particularly in the US, is adopting carbon trading as part of business strategy. A recent survey by the Carbon Disclosure Project found that many large US corporations are setting their own internal carbon pricing in anticipation of future environmental legislation and to assess the value and risk of various investment projects. – Climate News Network

EU carbon plan is refused reprieve

FOR IMMEDIATE RELEASE The narrow vote not to approve a proposal for breathing new life into the European Union’s emissions trading scheme has divided opinion, with environment ministers saying they will find a way round the decision. LONDON, 17 April – The rejection by the European Parliament on 16 April of a rescue plan for the European Union’s flagship carbon-trading scheme, the EU ETS, has caused widespread dismay among environmental groups and green industries. The winners were the coal-mining and heavy industries, backed by Eastern European governments, particularly Poland (see our story of 20 February), which believed that paying for carbon credits would damage their competitiveness when the EU is already struggling for growth. The decision, by a narrow margin of 19, with more than 650 MEPs voting, is a severe setback for the EU’s attempts to cut carbon emissions. The pioneer carbon-trading scheme, launched in 2008, was seen as a way of using market forces to both clean up the environment and encourage green industries by forcing factories to modernize. Immediately after the vote the EU’s Council of Environment Ministers vowed it would think of another way of reviving carbon trading to help green technologies. The scheme sets a limit on the amount of carbon each industry or factory can produce and theoretically forces improvements in efficiency by reducing the enterprise’s permit to pollute over time. If industries exceed their limits they have to buy carbon credits from others who have successfully invested in new technology and so reduced their emissions below their targets, and who therefore have “credits” to sell. The market fell apart, however, because EU governments gave in to their powerful industrial lobbies and set very easy-to-meet targets, so much so that some industries made no improvements at all and were still able to meet the limits set. As a result, there were large quantities of carbon credits on the market that gradually fell in value. To be effective, traders say, carbon needs to have a market price of around €50 a tonne, but yesterday, after the Parliament’s decision, the price dropped to less than €3.

Protecting the economy

  To try to rescue the scheme, which runs until 2020, the European Commission had devised a plan called “backloading”, which in effect would have taken quantities of carbon credits off the market. This in turn would have forced the price of the remaining credits back up to a level where industry would have found it cheaper to invest in new technology than to buy them. The MEPs rejected the Commission’s plan by the narrow margin of 334 votes to 315. Poland had lobbied against the plan to protect its vast coal-mining sector. The country’s Environment Minister, Marcin Korolec, called the decision “a vote of reason”, claiming the plan would have slowed economic development. Finnish MEP Eiga-Riitta Korhola said: “In the present economic situation, the decision of backloading would be a wrong signal for households and industries alike. The burden of rising costs is not needed now.” Greenpeace called the vote an “historic failure” to mend the carbon-trading market. Barring a way to curb an oversupply of permits, the ETS cannot “dissuade polluters and promote investments in cleaner production”, said Joris den Blanken, Greenpeace EU policy director. Stephanie Pfiefer, executive director of the Institutional Investors Group on Climate Change, said: “We are disappointed that MEPs have voted against the backloading proposal. “The ETS in its current guise may be flawed, but an EU-wide emissions trading scheme is important. Structured correctly, it can provide the long-term policy certainty necessary to drive low-carbon investment and reduce emissions.” – Climate News Network

FOR IMMEDIATE RELEASE The narrow vote not to approve a proposal for breathing new life into the European Union’s emissions trading scheme has divided opinion, with environment ministers saying they will find a way round the decision. LONDON, 17 April – The rejection by the European Parliament on 16 April of a rescue plan for the European Union’s flagship carbon-trading scheme, the EU ETS, has caused widespread dismay among environmental groups and green industries. The winners were the coal-mining and heavy industries, backed by Eastern European governments, particularly Poland (see our story of 20 February), which believed that paying for carbon credits would damage their competitiveness when the EU is already struggling for growth. The decision, by a narrow margin of 19, with more than 650 MEPs voting, is a severe setback for the EU’s attempts to cut carbon emissions. The pioneer carbon-trading scheme, launched in 2008, was seen as a way of using market forces to both clean up the environment and encourage green industries by forcing factories to modernize. Immediately after the vote the EU’s Council of Environment Ministers vowed it would think of another way of reviving carbon trading to help green technologies. The scheme sets a limit on the amount of carbon each industry or factory can produce and theoretically forces improvements in efficiency by reducing the enterprise’s permit to pollute over time. If industries exceed their limits they have to buy carbon credits from others who have successfully invested in new technology and so reduced their emissions below their targets, and who therefore have “credits” to sell. The market fell apart, however, because EU governments gave in to their powerful industrial lobbies and set very easy-to-meet targets, so much so that some industries made no improvements at all and were still able to meet the limits set. As a result, there were large quantities of carbon credits on the market that gradually fell in value. To be effective, traders say, carbon needs to have a market price of around €50 a tonne, but yesterday, after the Parliament’s decision, the price dropped to less than €3.

Protecting the economy

  To try to rescue the scheme, which runs until 2020, the European Commission had devised a plan called “backloading”, which in effect would have taken quantities of carbon credits off the market. This in turn would have forced the price of the remaining credits back up to a level where industry would have found it cheaper to invest in new technology than to buy them. The MEPs rejected the Commission’s plan by the narrow margin of 334 votes to 315. Poland had lobbied against the plan to protect its vast coal-mining sector. The country’s Environment Minister, Marcin Korolec, called the decision “a vote of reason”, claiming the plan would have slowed economic development. Finnish MEP Eiga-Riitta Korhola said: “In the present economic situation, the decision of backloading would be a wrong signal for households and industries alike. The burden of rising costs is not needed now.” Greenpeace called the vote an “historic failure” to mend the carbon-trading market. Barring a way to curb an oversupply of permits, the ETS cannot “dissuade polluters and promote investments in cleaner production”, said Joris den Blanken, Greenpeace EU policy director. Stephanie Pfiefer, executive director of the Institutional Investors Group on Climate Change, said: “We are disappointed that MEPs have voted against the backloading proposal. “The ETS in its current guise may be flawed, but an EU-wide emissions trading scheme is important. Structured correctly, it can provide the long-term policy certainty necessary to drive low-carbon investment and reduce emissions.” – Climate News Network

Europe's carbon market limps on

EMBARGOED until 0001 GMT on Wednesday 20 February
Europe’s faltering attempt to tackle climate change by giving carbon a value which would encourage industry to cut greenhouse emissions has been given a reprieve.

LONDON, 20 February – The European Union’s failing carbon market has been thrown a lifeline by the European Parliament’s Environment Committee.  It has backed the Commission’s plan to prop up the price of a tonne of carbon by withdrawing an oversupply of credits from the market.

Carbon trading is one of the major EU policies designed to combat climate change. But a combination of successful lobbying by industry bodies, political interference and lack of economic growth has brought the scheme close to collapse, so that it is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient.

The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit.

Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions.

But the market has been in trouble for years, with a gradually sliding price for carbon because industry had no trouble meeting its unrealistically low targets on energy efficiency. This led to a vast surplus of carbon credits and few needing to buy them.

As a result the price of carbon fell from 30 euros a tonne in 2008 to under five this year. This left no incentive for industry to reduce its emissions – it was cheaper and easier to buy cheap carbon credits.

Since the carbon market was an important part of the EU’s strategy to bring its overall greenhouse gas emissions down, the Commission needed a way to get the price to rise again.

Given a breathing space

 

It devised a system to withdraw credits from the market, so reducing the surplus, and then to reintroduce them gradually at a later date, maintaining the pressure on industry to become more energy-efficient.

The plan looked doomed last month when the European Parliament and Industry Committee voted down the Commission’s scheme after intense lobbying by the European Steel Association. The steel industry fears overseas competition if it has to pay high prices for carbon credits when Asian companies do not.

On Tuesday this week the Environment Committee of the same Parliament took a different view, leaving the way open for the whole Parliament to support a revival of the Commission’s plan, and if that works, a rise in the price of carbon.

The markets were not convinced, however. Instead of the price of carbon rising, as optimists might have supposed, the price fell from 5.13 euros a tonne to 4.09.

Marcus Ferdinand, senior market analyst at Thomson Reuters Point Carbon, said the reaction was mainly because that was what the market had expected the Committee to do. “It also indicates that the market remains sceptical as to whether politicians will support the measure in the end”, he said.

EU governments, which had left themselves with a climate change strategy in tatters because they had given away too much to big business in the first place, now have a chance to back the rescue plan.

Negotiations between all the parties involved are under way to see exactly how the plan would work to raise the price without damaging industry.

The position of the German and Polish Governments is key, because the health of heavy industry is crucial to both economies. Analysts believe there is still a long way to go to get the Parliament, the Council of Ministers and the Commission to agree on a deal. – Climate News Network

EMBARGOED until 0001 GMT on Wednesday 20 February
Europe’s faltering attempt to tackle climate change by giving carbon a value which would encourage industry to cut greenhouse emissions has been given a reprieve.

LONDON, 20 February – The European Union’s failing carbon market has been thrown a lifeline by the European Parliament’s Environment Committee.  It has backed the Commission’s plan to prop up the price of a tonne of carbon by withdrawing an oversupply of credits from the market.

Carbon trading is one of the major EU policies designed to combat climate change. But a combination of successful lobbying by industry bodies, political interference and lack of economic growth has brought the scheme close to collapse, so that it is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient.

The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit.

Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions.

But the market has been in trouble for years, with a gradually sliding price for carbon because industry had no trouble meeting its unrealistically low targets on energy efficiency. This led to a vast surplus of carbon credits and few needing to buy them.

As a result the price of carbon fell from 30 euros a tonne in 2008 to under five this year. This left no incentive for industry to reduce its emissions – it was cheaper and easier to buy cheap carbon credits.

Since the carbon market was an important part of the EU’s strategy to bring its overall greenhouse gas emissions down, the Commission needed a way to get the price to rise again.

Given a breathing space

 

It devised a system to withdraw credits from the market, so reducing the surplus, and then to reintroduce them gradually at a later date, maintaining the pressure on industry to become more energy-efficient.

The plan looked doomed last month when the European Parliament and Industry Committee voted down the Commission’s scheme after intense lobbying by the European Steel Association. The steel industry fears overseas competition if it has to pay high prices for carbon credits when Asian companies do not.

On Tuesday this week the Environment Committee of the same Parliament took a different view, leaving the way open for the whole Parliament to support a revival of the Commission’s plan, and if that works, a rise in the price of carbon.

The markets were not convinced, however. Instead of the price of carbon rising, as optimists might have supposed, the price fell from 5.13 euros a tonne to 4.09.

Marcus Ferdinand, senior market analyst at Thomson Reuters Point Carbon, said the reaction was mainly because that was what the market had expected the Committee to do. “It also indicates that the market remains sceptical as to whether politicians will support the measure in the end”, he said.

EU governments, which had left themselves with a climate change strategy in tatters because they had given away too much to big business in the first place, now have a chance to back the rescue plan.

Negotiations between all the parties involved are under way to see exactly how the plan would work to raise the price without damaging industry.

The position of the German and Polish Governments is key, because the health of heavy industry is crucial to both economies. Analysts believe there is still a long way to go to get the Parliament, the Council of Ministers and the Commission to agree on a deal. – Climate News Network

Europe’s carbon market limps on

EMBARGOED until 0001 GMT on Wednesday 20 February Europe’s faltering attempt to tackle climate change by giving carbon a value which would encourage industry to cut greenhouse emissions has been given a reprieve. LONDON, 20 February – The European Union’s failing carbon market has been thrown a lifeline by the European Parliament’s Environment Committee.  It has backed the Commission’s plan to prop up the price of a tonne of carbon by withdrawing an oversupply of credits from the market. Carbon trading is one of the major EU policies designed to combat climate change. But a combination of successful lobbying by industry bodies, political interference and lack of economic growth has brought the scheme close to collapse, so that it is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient. The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit. Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions. But the market has been in trouble for years, with a gradually sliding price for carbon because industry had no trouble meeting its unrealistically low targets on energy efficiency. This led to a vast surplus of carbon credits and few needing to buy them. As a result the price of carbon fell from 30 euros a tonne in 2008 to under five this year. This left no incentive for industry to reduce its emissions – it was cheaper and easier to buy cheap carbon credits. Since the carbon market was an important part of the EU’s strategy to bring its overall greenhouse gas emissions down, the Commission needed a way to get the price to rise again.

Given a breathing space

  It devised a system to withdraw credits from the market, so reducing the surplus, and then to reintroduce them gradually at a later date, maintaining the pressure on industry to become more energy-efficient. The plan looked doomed last month when the European Parliament and Industry Committee voted down the Commission’s scheme after intense lobbying by the European Steel Association. The steel industry fears overseas competition if it has to pay high prices for carbon credits when Asian companies do not. On Tuesday this week the Environment Committee of the same Parliament took a different view, leaving the way open for the whole Parliament to support a revival of the Commission’s plan, and if that works, a rise in the price of carbon. The markets were not convinced, however. Instead of the price of carbon rising, as optimists might have supposed, the price fell from 5.13 euros a tonne to 4.09. Marcus Ferdinand, senior market analyst at Thomson Reuters Point Carbon, said the reaction was mainly because that was what the market had expected the Committee to do. “It also indicates that the market remains sceptical as to whether politicians will support the measure in the end”, he said. EU governments, which had left themselves with a climate change strategy in tatters because they had given away too much to big business in the first place, now have a chance to back the rescue plan. Negotiations between all the parties involved are under way to see exactly how the plan would work to raise the price without damaging industry. The position of the German and Polish Governments is key, because the health of heavy industry is crucial to both economies. Analysts believe there is still a long way to go to get the Parliament, the Council of Ministers and the Commission to agree on a deal. – Climate News Network

EMBARGOED until 0001 GMT on Wednesday 20 February Europe’s faltering attempt to tackle climate change by giving carbon a value which would encourage industry to cut greenhouse emissions has been given a reprieve. LONDON, 20 February – The European Union’s failing carbon market has been thrown a lifeline by the European Parliament’s Environment Committee.  It has backed the Commission’s plan to prop up the price of a tonne of carbon by withdrawing an oversupply of credits from the market. Carbon trading is one of the major EU policies designed to combat climate change. But a combination of successful lobbying by industry bodies, political interference and lack of economic growth has brought the scheme close to collapse, so that it is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient. The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit. Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions. But the market has been in trouble for years, with a gradually sliding price for carbon because industry had no trouble meeting its unrealistically low targets on energy efficiency. This led to a vast surplus of carbon credits and few needing to buy them. As a result the price of carbon fell from 30 euros a tonne in 2008 to under five this year. This left no incentive for industry to reduce its emissions – it was cheaper and easier to buy cheap carbon credits. Since the carbon market was an important part of the EU’s strategy to bring its overall greenhouse gas emissions down, the Commission needed a way to get the price to rise again.

Given a breathing space

  It devised a system to withdraw credits from the market, so reducing the surplus, and then to reintroduce them gradually at a later date, maintaining the pressure on industry to become more energy-efficient. The plan looked doomed last month when the European Parliament and Industry Committee voted down the Commission’s scheme after intense lobbying by the European Steel Association. The steel industry fears overseas competition if it has to pay high prices for carbon credits when Asian companies do not. On Tuesday this week the Environment Committee of the same Parliament took a different view, leaving the way open for the whole Parliament to support a revival of the Commission’s plan, and if that works, a rise in the price of carbon. The markets were not convinced, however. Instead of the price of carbon rising, as optimists might have supposed, the price fell from 5.13 euros a tonne to 4.09. Marcus Ferdinand, senior market analyst at Thomson Reuters Point Carbon, said the reaction was mainly because that was what the market had expected the Committee to do. “It also indicates that the market remains sceptical as to whether politicians will support the measure in the end”, he said. EU governments, which had left themselves with a climate change strategy in tatters because they had given away too much to big business in the first place, now have a chance to back the rescue plan. Negotiations between all the parties involved are under way to see exactly how the plan would work to raise the price without damaging industry. The position of the German and Polish Governments is key, because the health of heavy industry is crucial to both economies. Analysts believe there is still a long way to go to get the Parliament, the Council of Ministers and the Commission to agree on a deal. – Climate News Network

Europe's carbon scheme goes up in smoke

EMBARGOED until 0001 GMT on Sunday 27 January
Europe’s attempt to tackle climate change by giving carbon a value which would encourage industry to cut greenhouse emissions is struggling for survival.

LONDON, 27 January – Carbon trading, one of the major European Union policies designed to combat climate change, is failing. A combination of successful lobbying by industry bodies, political interference and lack of economic growth has wrecked the scheme.

It is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient.

Another blow came on Thursday (25 January) when a committee of European MPs voted down a scheme to rescue the carbon trading scheme. But there may still be a slim chance to save it.

The Environment Committee of the European Parliament is likely to be more sympathetic to a rescue package when it votes on 19 February, and with so much depending on the outcome there is potential for the whole Parliament to discuss support for the scheme in March.

The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit.

Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The plan was to reward those who spent the money they earned on new technology or other efficiency measures.

Hitting the floor

The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions – but the price has now collapsed to an all-time low.

The scheme was launched on 1 January 2005 with caps on 11,500 plants across the 25 EU countries, amid high hopes that the market for carbon would help the European Union towards a 20% reduction in greenhouse gas emissions by 2020.

Carbon markets were set up to trade these notional units of tonnes of carbon saved. Analysts believed that the price needed to be between 20 and 50 euros a tonne to provide sufficient incentive for industry to become more efficient.

Despite early signs of success – when the price peaked at 30 euros a tonne in the summer of 2008 – the price of carbon never held up to the required level.  In April 2010 the price had dropped to 15.30 euros a tonne when Germany sold 300,000 carbon permits. From there it continued to drift down and earlier this month dropped below five euros for the first time. It had become decidedly cheaper to pollute than to become efficient.

On Thursday the price briefly plunged further, to 2.81 euros, after a vote by the European Parliament Energy and Industry committee to support prices by withdrawing permits from the market and reintroducing them later.  Members of the committee had been intensively lobbied by the European Steel Association (Eurofer).

“Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.”

This combination of successful lobbying by industry bodies and subsequent political interference has undermined the scheme. Special pleading that EU companies would be made uncompetitive if they had to pay too much for carbon credits, or spend too much on efficiency, meant that many industries were set emission caps that were too lenient.

In fact some were set so high that the industries stayed well below them without taking any efficiency measures at all.  They therefore gained carbon credits simply by lobbying governments and were able to profit by selling them.

While the carbon trading scheme was not a disaster in all sectors and all countries, it has failed to achieve its objectives. This has been worsened because, built into the scheme, were forecasts for economic growth which were not fulfilled.

The European Commission failed to adjust the trading scheme to fit these new circumstances, and as a result there are now so many unsold carbon credits on the market that it is hard to see how the price could recover.

The EU began looking at ways to rescue its flagship policy by withholding unused credits and releasing them onto the market later, or simply cancelling millions of them. Germany is lukewarm on these rescue plans and some governments are outright opposed, for example Poland, which has a large coal industry and would lose sales if polluting factories were penalised.

Abolition calls

 

However, the European Commission has warned that the scheme could become irrelevant unless parties agree a rescue plan. “This should be the final wake-up call both to governments and the European Parliament,” EU Climate Commissioner Connie Hedegaard said.

Not all of industry is opposed to the system. Royal Dutch Shell’s environment advisor David Hone said what was needed was a clear price on carbon rather than a volatile and unpredictable market.

Some non-government organisations are scathing about the chances of EU efforts pushing the price of carbon back up and believe the whole system is so discredited it should be abolished.

Joanna Cabello from Carbon Trade Watch said: “The ETS is not fit for purpose. It has generated windfall profits for polluting corporations, postponed the needed transition away from fossil fuels, and its unintended consequences are locking the EU into another generation of energy production based on fossil fuels. These structural flaws remain unaddressed by the Commission.

“Instead of taking their responsibility, politicians have voluntarily put their main instrument to fight climate change in the hands of the financial markets. As we know, market mechanisms have their own dynamic. Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.”

She said it was an illusion to believe that proposals by the Commission would be able to improve the scheme substantially. – Climate News Network

EMBARGOED until 0001 GMT on Sunday 27 January
Europe’s attempt to tackle climate change by giving carbon a value which would encourage industry to cut greenhouse emissions is struggling for survival.

LONDON, 27 January – Carbon trading, one of the major European Union policies designed to combat climate change, is failing. A combination of successful lobbying by industry bodies, political interference and lack of economic growth has wrecked the scheme.

It is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient.

Another blow came on Thursday (25 January) when a committee of European MPs voted down a scheme to rescue the carbon trading scheme. But there may still be a slim chance to save it.

The Environment Committee of the European Parliament is likely to be more sympathetic to a rescue package when it votes on 19 February, and with so much depending on the outcome there is potential for the whole Parliament to discuss support for the scheme in March.

The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit.

Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The plan was to reward those who spent the money they earned on new technology or other efficiency measures.

Hitting the floor

The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions – but the price has now collapsed to an all-time low.

The scheme was launched on 1 January 2005 with caps on 11,500 plants across the 25 EU countries, amid high hopes that the market for carbon would help the European Union towards a 20% reduction in greenhouse gas emissions by 2020.

Carbon markets were set up to trade these notional units of tonnes of carbon saved. Analysts believed that the price needed to be between 20 and 50 euros a tonne to provide sufficient incentive for industry to become more efficient.

Despite early signs of success – when the price peaked at 30 euros a tonne in the summer of 2008 – the price of carbon never held up to the required level.  In April 2010 the price had dropped to 15.30 euros a tonne when Germany sold 300,000 carbon permits. From there it continued to drift down and earlier this month dropped below five euros for the first time. It had become decidedly cheaper to pollute than to become efficient.

On Thursday the price briefly plunged further, to 2.81 euros, after a vote by the European Parliament Energy and Industry committee to support prices by withdrawing permits from the market and reintroducing them later.  Members of the committee had been intensively lobbied by the European Steel Association (Eurofer).

“Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.”

This combination of successful lobbying by industry bodies and subsequent political interference has undermined the scheme. Special pleading that EU companies would be made uncompetitive if they had to pay too much for carbon credits, or spend too much on efficiency, meant that many industries were set emission caps that were too lenient.

In fact some were set so high that the industries stayed well below them without taking any efficiency measures at all.  They therefore gained carbon credits simply by lobbying governments and were able to profit by selling them.

While the carbon trading scheme was not a disaster in all sectors and all countries, it has failed to achieve its objectives. This has been worsened because, built into the scheme, were forecasts for economic growth which were not fulfilled.

The European Commission failed to adjust the trading scheme to fit these new circumstances, and as a result there are now so many unsold carbon credits on the market that it is hard to see how the price could recover.

The EU began looking at ways to rescue its flagship policy by withholding unused credits and releasing them onto the market later, or simply cancelling millions of them. Germany is lukewarm on these rescue plans and some governments are outright opposed, for example Poland, which has a large coal industry and would lose sales if polluting factories were penalised.

Abolition calls

 

However, the European Commission has warned that the scheme could become irrelevant unless parties agree a rescue plan. “This should be the final wake-up call both to governments and the European Parliament,” EU Climate Commissioner Connie Hedegaard said.

Not all of industry is opposed to the system. Royal Dutch Shell’s environment advisor David Hone said what was needed was a clear price on carbon rather than a volatile and unpredictable market.

Some non-government organisations are scathing about the chances of EU efforts pushing the price of carbon back up and believe the whole system is so discredited it should be abolished.

Joanna Cabello from Carbon Trade Watch said: “The ETS is not fit for purpose. It has generated windfall profits for polluting corporations, postponed the needed transition away from fossil fuels, and its unintended consequences are locking the EU into another generation of energy production based on fossil fuels. These structural flaws remain unaddressed by the Commission.

“Instead of taking their responsibility, politicians have voluntarily put their main instrument to fight climate change in the hands of the financial markets. As we know, market mechanisms have their own dynamic. Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.”

She said it was an illusion to believe that proposals by the Commission would be able to improve the scheme substantially. – Climate News Network

Europe’s carbon scheme goes up in smoke

EMBARGOED until 0001 GMT on Sunday 27 January Europe’s attempt to tackle climate change by giving carbon a value which would encourage industry to cut greenhouse emissions is struggling for survival. LONDON, 27 January – Carbon trading, one of the major European Union policies designed to combat climate change, is failing. A combination of successful lobbying by industry bodies, political interference and lack of economic growth has wrecked the scheme. It is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient. Another blow came on Thursday (25 January) when a committee of European MPs voted down a scheme to rescue the carbon trading scheme. But there may still be a slim chance to save it. The Environment Committee of the European Parliament is likely to be more sympathetic to a rescue package when it votes on 19 February, and with so much depending on the outcome there is potential for the whole Parliament to discuss support for the scheme in March. The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit. Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The plan was to reward those who spent the money they earned on new technology or other efficiency measures.

Hitting the floor

The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions – but the price has now collapsed to an all-time low. The scheme was launched on 1 January 2005 with caps on 11,500 plants across the 25 EU countries, amid high hopes that the market for carbon would help the European Union towards a 20% reduction in greenhouse gas emissions by 2020. Carbon markets were set up to trade these notional units of tonnes of carbon saved. Analysts believed that the price needed to be between 20 and 50 euros a tonne to provide sufficient incentive for industry to become more efficient. Despite early signs of success – when the price peaked at 30 euros a tonne in the summer of 2008 – the price of carbon never held up to the required level.  In April 2010 the price had dropped to 15.30 euros a tonne when Germany sold 300,000 carbon permits. From there it continued to drift down and earlier this month dropped below five euros for the first time. It had become decidedly cheaper to pollute than to become efficient. On Thursday the price briefly plunged further, to 2.81 euros, after a vote by the European Parliament Energy and Industry committee to support prices by withdrawing permits from the market and reintroducing them later.  Members of the committee had been intensively lobbied by the European Steel Association (Eurofer).

“Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.”

This combination of successful lobbying by industry bodies and subsequent political interference has undermined the scheme. Special pleading that EU companies would be made uncompetitive if they had to pay too much for carbon credits, or spend too much on efficiency, meant that many industries were set emission caps that were too lenient. In fact some were set so high that the industries stayed well below them without taking any efficiency measures at all.  They therefore gained carbon credits simply by lobbying governments and were able to profit by selling them. While the carbon trading scheme was not a disaster in all sectors and all countries, it has failed to achieve its objectives. This has been worsened because, built into the scheme, were forecasts for economic growth which were not fulfilled. The European Commission failed to adjust the trading scheme to fit these new circumstances, and as a result there are now so many unsold carbon credits on the market that it is hard to see how the price could recover. The EU began looking at ways to rescue its flagship policy by withholding unused credits and releasing them onto the market later, or simply cancelling millions of them. Germany is lukewarm on these rescue plans and some governments are outright opposed, for example Poland, which has a large coal industry and would lose sales if polluting factories were penalised.

Abolition calls

  However, the European Commission has warned that the scheme could become irrelevant unless parties agree a rescue plan. “This should be the final wake-up call both to governments and the European Parliament,” EU Climate Commissioner Connie Hedegaard said. Not all of industry is opposed to the system. Royal Dutch Shell’s environment advisor David Hone said what was needed was a clear price on carbon rather than a volatile and unpredictable market. Some non-government organisations are scathing about the chances of EU efforts pushing the price of carbon back up and believe the whole system is so discredited it should be abolished. Joanna Cabello from Carbon Trade Watch said: “The ETS is not fit for purpose. It has generated windfall profits for polluting corporations, postponed the needed transition away from fossil fuels, and its unintended consequences are locking the EU into another generation of energy production based on fossil fuels. These structural flaws remain unaddressed by the Commission. “Instead of taking their responsibility, politicians have voluntarily put their main instrument to fight climate change in the hands of the financial markets. As we know, market mechanisms have their own dynamic. Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.” She said it was an illusion to believe that proposals by the Commission would be able to improve the scheme substantially. – Climate News Network

EMBARGOED until 0001 GMT on Sunday 27 January Europe’s attempt to tackle climate change by giving carbon a value which would encourage industry to cut greenhouse emissions is struggling for survival. LONDON, 27 January – Carbon trading, one of the major European Union policies designed to combat climate change, is failing. A combination of successful lobbying by industry bodies, political interference and lack of economic growth has wrecked the scheme. It is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient. Another blow came on Thursday (25 January) when a committee of European MPs voted down a scheme to rescue the carbon trading scheme. But there may still be a slim chance to save it. The Environment Committee of the European Parliament is likely to be more sympathetic to a rescue package when it votes on 19 February, and with so much depending on the outcome there is potential for the whole Parliament to discuss support for the scheme in March. The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit. Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The plan was to reward those who spent the money they earned on new technology or other efficiency measures.

Hitting the floor

The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions – but the price has now collapsed to an all-time low. The scheme was launched on 1 January 2005 with caps on 11,500 plants across the 25 EU countries, amid high hopes that the market for carbon would help the European Union towards a 20% reduction in greenhouse gas emissions by 2020. Carbon markets were set up to trade these notional units of tonnes of carbon saved. Analysts believed that the price needed to be between 20 and 50 euros a tonne to provide sufficient incentive for industry to become more efficient. Despite early signs of success – when the price peaked at 30 euros a tonne in the summer of 2008 – the price of carbon never held up to the required level.  In April 2010 the price had dropped to 15.30 euros a tonne when Germany sold 300,000 carbon permits. From there it continued to drift down and earlier this month dropped below five euros for the first time. It had become decidedly cheaper to pollute than to become efficient. On Thursday the price briefly plunged further, to 2.81 euros, after a vote by the European Parliament Energy and Industry committee to support prices by withdrawing permits from the market and reintroducing them later.  Members of the committee had been intensively lobbied by the European Steel Association (Eurofer).

“Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.”

This combination of successful lobbying by industry bodies and subsequent political interference has undermined the scheme. Special pleading that EU companies would be made uncompetitive if they had to pay too much for carbon credits, or spend too much on efficiency, meant that many industries were set emission caps that were too lenient. In fact some were set so high that the industries stayed well below them without taking any efficiency measures at all.  They therefore gained carbon credits simply by lobbying governments and were able to profit by selling them. While the carbon trading scheme was not a disaster in all sectors and all countries, it has failed to achieve its objectives. This has been worsened because, built into the scheme, were forecasts for economic growth which were not fulfilled. The European Commission failed to adjust the trading scheme to fit these new circumstances, and as a result there are now so many unsold carbon credits on the market that it is hard to see how the price could recover. The EU began looking at ways to rescue its flagship policy by withholding unused credits and releasing them onto the market later, or simply cancelling millions of them. Germany is lukewarm on these rescue plans and some governments are outright opposed, for example Poland, which has a large coal industry and would lose sales if polluting factories were penalised.

Abolition calls

  However, the European Commission has warned that the scheme could become irrelevant unless parties agree a rescue plan. “This should be the final wake-up call both to governments and the European Parliament,” EU Climate Commissioner Connie Hedegaard said. Not all of industry is opposed to the system. Royal Dutch Shell’s environment advisor David Hone said what was needed was a clear price on carbon rather than a volatile and unpredictable market. Some non-government organisations are scathing about the chances of EU efforts pushing the price of carbon back up and believe the whole system is so discredited it should be abolished. Joanna Cabello from Carbon Trade Watch said: “The ETS is not fit for purpose. It has generated windfall profits for polluting corporations, postponed the needed transition away from fossil fuels, and its unintended consequences are locking the EU into another generation of energy production based on fossil fuels. These structural flaws remain unaddressed by the Commission. “Instead of taking their responsibility, politicians have voluntarily put their main instrument to fight climate change in the hands of the financial markets. As we know, market mechanisms have their own dynamic. Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.” She said it was an illusion to believe that proposals by the Commission would be able to improve the scheme substantially. – Climate News Network