EU Carbon Trading ‘death spiral’ continues

kingsford_BBQ

A bag of charcoal briquettes is worth more than a ton of EU carbon right now.

UPDATE: it’s worse than we thought, see below.

Carbon has closed below $4 a ton in a new record low while Deutsche Bank bails

From Reuters:

Deutsche Bank quits carbon market: board member

31 Jan 2013 12:42 Last updated: 31 Jan 2013 15:04

LONDON, Jan 31 (Reuters Point Carbon) – Deutsche Bank has shut its global carbon trading operations, a member of the investment bank’s board of directors said on Thursday.  Source: http://www.pointcarbon.com/news/1.2162216

In addition to the price dropping to below the price of a bag of charcoal briquettes, it may have something to do with this investigation:

Deutsche Bank co-chief named in carbon tax investigation

Two board members at Deutsche Bank, including the lender’s co-chief executive, have been drawn into a police investigation into tax evasion related to the group’s carbon trading business.

Source: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9740904/Deutsche-Bank-co-chief-named-in-carbon-tax-investigation.html

Meanwhile, carbon closed yesterday at a new record low, losing about 8% of its value yesterday.

EUCarbon_1-31-13

It looks like that by the close of trading today, EUA carbon will have lost about half its value since the peak in early January.

New Zealand’s experiment in carbon trading isn’t looking good either:

NZ carbon finds new record lows amid stable supply

31 Jan 2013 09:59

BEIJING, Jan 31 (Reuters Point Carbon) – Spot permits in the New Zealand Emissions Trading Scheme (ETS) fell 6.5 percent week-on-week to close Thursday at NZ$2.45 ($2.05), the lowest weekly closing price ever recorded as fresh supply continued to find its way to the market.

Source: http://www.pointcarbon.com/news/1.2161391

UPDATE: the market has closed today, with another record loss, for a nearly 50% drop in value in January 2013.

pointcarbon_1-31-13

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62 Responses to EU Carbon Trading ‘death spiral’ continues

  1. Ponzi schemes tend to collapse some time, some day, at every location.

  2. It had to happen. So good news but not the news that Europolitics wanted but if you back a pup you loose.

  3. Jimmy Haigh says:

    The only way is down…

  4. Chris Beal @NJ_Snow_Fan says:

    ENRON ENRON all I can Say. Lock them up.

    http://en.wikipedia.org/wiki/Enron_scandal

  5. Doug Huffman says:

    Only the little guy pays in a Ponzi. Let’s criminalize and nationalize AlGore’s ill-gotten wealth under RICO.

  6. Scarface says:

    Interesting would be to find out who has a short position in these EU-carbon credits.
    I dare to bet that there will be very GREEN names on that list.

  7. A sad but deserved situation for elitist technocrats and their unfortunate investors. It stirs up lyrical memories from Thomas Wayne’s 1959 one-hit wonder, “Tragedy”.

    Blown by wind,
    Kissed by snow,
    All that’s left is the dark below,
    You’ve gone from me, oh, oh, tragedy,

  8. ferd berple says:

    Making money out of thin air used to be the profession of central banks and counterfeiters. Now anyone can do it, simply by agreeing to not build a power plant or open a new factory and getting paid for the carbon pollution this saves.

    It doesn’t take long to draw up thousands of plans for new power plants and factories and then agreeing not to build them in return for money. Here in Beautiful BC big business has been making hundreds of millions through the Pacific Carbon Trust taking taxpayer money out of the school system in return for not building new manufacturing facilities.

    In return the schools are allowed to emit the carbon that business avoid by not expanding locally. Instead, the businesses move to China and burn coal exported from BC. So, instead of using power generated in BC from Hydro Dams, businesses are instead using BC coal in China, all paid for by the BC taxpayers.

    The power of bureaucracy in action. Able at a single bound to take a good situation and turn it into a disaster, while making someone rich in the process.

  9. philjourdan says:

    just another scam, that the greens are behind it matters not. It could just as easily have been the Nigerians.

  10. dp says:

    I wonder what this bailout is going to cost us.

  11. HaHaHaHa…I can’t wait until all the carbon trading schemes are at 0.

  12. JOHN BELL says:

    Can someone please explain to me how this was supposed to work initially? That people should pay someone for the right to burn carbon?

  13. David says:

    In the meantime, the UK government has perkily come up with its ‘Green Deal’…
    This is a LOAN scheme (at not-exactly-attractive rates), where by you can borrow money (from a private company, not the government) to insulate your home; fit a more efficient boiler; etc, etc. No ‘up-front’ costs (oh – apart from an ‘assessment’ fee – typically £100-£300) and you pay back the LOAN over 25 years (so expect to pay around twice the original cost) through your electricity bill (no word as to whether the power companies will add an ‘administration’ fee for doing this – but I know what my money’s on)…
    You move house – the loan stays put. Cue an unsaleable property…
    Been well thought through, hasn’t it..?

  14. Peter Miller says:

    Fallen another 7% today. According to Reuters the latest price is 3.43 Euros.

    Perhaps if Mann produced a bigger, new improved Hockey Stick that might help halt the free fall.

  15. Peter Miller says:

    Oops, that’s Bloomberg, not Reuters, reporting today’s price at 3.43 Euros.

  16. Tom J says:

    I hate to be a party pooper but I’d be just a bit wary of this. I’m betting that the climateers, all along, wanted an approach to global warming (or climate change, or dirty weather, or whatever name the marketing types have discovered to keep it fashionable) that would involve command and control. This gives them the excuse to say, “see, the free market doesn’t work”, we need government edicts instead. Carbon taxes anyone? It ain’t over yet.

  17. Sean says:

    Good thing the state of California had the good sense to set the floor price of carbon in their cap and trade system at $10.

  18. Paul Westhaver says:

    How many carbon markets are there?
    Are they all in trouble, assuming the EU’s as being the most robust?

  19. Jaye Bass says:

    Making money out of thin air used to be the profession of central banks and counterfeiters. Now anyone can do it, simply by agreeing to not build a power plant or open a new factory and getting paid for the carbon pollution this saves.

    It doesn’t take long to draw up thousands of plans for new power plants and factories and then agreeing not to build them in return for money. Here in Beautiful BC big business has been making hundreds of millions through the Pacific Carbon Trust taking taxpayer money out of the school system in return for not building new manufacturing facilities.

    In return the schools are allowed to emit the carbon that business avoid by not expanding locally. Instead, the businesses move to China and burn coal exported from BC. So, instead of using power generated in BC from Hydro Dams, businesses are instead using BC coal in China, all paid for by the BC taxpayers.

    The power of bureaucracy in action. Able at a single bound to take a good situation and turn it into a disaster, while making someone rich in the process.

    Dang…I was about to agree to not build a power plant on my land this week.

  20. @fred berple: Making money out of thin air used to be the profession of central banks and counterfeiters. Now anyone can do it, simply by agreeing to not build a power plant or open a new factory and getting paid for the carbon pollution this saves.

    Well said. I remember well a scene from a 1967 sit com called “The Second Hundred Years.”. The premise of the show was “Rip Van Winkle”, a 1890’s prospector, “Luke”, is found frozen, thawed out, and tries to make sense of modern America while living with his much older son and grandson.

    Luke tries his hand a farming. Luke is approached by a US Dept of Ag. Rep and is told that he can receive price supports for taking land out of production. Luke expresses his surprise at the dinner table.

    Luke: “Well that got me to thinking. Suppose I take that money and buy another farm, less fertile but more acreage. I agree not to farm that. And do it again. Pretty soon I’ll be the richest farmer in the country with land that grows nothing but money!”

    Grandson: “Welcome to the 20th Century, Grandpa.”

  21. john robertson says:

    Equal justice for Bernie Madoff, Paul Jones, both doing time for much lesser crimes.
    If the sentences given these two con artists are just, and they are, then our officials that imposed this carbon trading scheme should face absurdly draconian sentences.

  22. richard verney says:

    What I want to know is why an individual cannot buy say 50 tonnes of carbon and then pay no green taxes on their electrity supply for many years on the basis that they are carbon neutral and can offset the carbon bonds against CO2 emissions resultant from the energy used. Indeed, why can’t it be off-set say against air travel thereby avoiding the green taxes that the government levies on air travel, or perhaps patrol and the green taxes levied on that etc..

    I pay at least £1,000 per year in green taxes on my electrity supply so it would make good financial sense to stock up on say 10 tonnes of carbon bonds and pay no green tax. . .

  23. John West says:

    It’s a slippery slope!

  24. thelastdemocrat says:

    current level is irrelevant as long as it seems prospective that the UNPRI and everyone else can eventually get a critical mass of green energy commitments. as long as th emomentum is moving in the direction of getting more nations on board bit by bit, then there will be a market in the long run.

    there are two markets: one where the govt encourages or requires major portions of the economy to go green, and one where carbon credits exists.

    lobbyists can influence policy makers to have their governments go green. this can be lobbied by typical lobbying tactics: buy the politicians

    If the govts around the world continue to push the move toward green energy, those investments work, AND as more nations and dollars go into green investments/infrastructure, the more likely that a carbon market is to mature.

    what can halt this is if enough experience indicates that the economic benefit simply is not there – such as has been developing in spain. but this factor will have to be pretty big for people to see it and believe it applies to them, as well.

    there is always the argument that spain moved too early, before the technology was at the right efficiency, but hey, here is the new technology (with limits disguised in graphs and charts).

    so, 1. the carbon market being low does not necessarily mean an end to th ecap-and-trade idea at all; 2. if you have money for speculation: BUY! (notice: this comment is for entertainment purposes only, and should not be construed as financial advice. neither the host of this program nor the radio station…)

  25. Ric Werme says:

    Sean says:
    January 31, 2013 at 8:35 am

    Good thing the state of California had the good sense to set the floor price of carbon in their cap and trade system at $10.

    I’m not certain how the California or European deals work, but for RGGI here in the northeast US, their is a floor price – for the auction. There is no floor for the secondary market, but there are so many carbon dioxide allowances available that there is little interest in the secondary market.

    The current auction floor price is, umm, I’m not sure. It will be last year’s $1.93 plus a few cents for inflation. The secondary market price has been only a few cents away, but I’m not even sure there is an organized market any more as it used to be handled by

    See http://wermenh.com/rggiwatch/ for more.

    BTW, RGGI is very good about referring to “carbon dioxide allowances”. I’ve never seen them refer to carbon allowances. They also deal in short tons, I hypothesize that US coal is sold by short ton.

    The last annual report on the RGGI market, http://rggi.org/docs/MM_2011_Annual_Report.pdf , says

    Trading activity in the secondary market for RGGI CO2 allowances has declined over the past three years. This is reflected in the average daily volume of trading of futures contracts listed on the Chicago Climate Futures Exchange (“CCFE”), which fell from 2.7 million in 2009, to 0.2 million in 2010, to 0.03 million in 2011.

  26. Leonard from Belgium says:

    Deutsche Bank quitting carbon market: it’s as if the Pope didn’t go to the mass anymore…

  27. Big D in TX says:

    richard verney says:
    January 31, 2013 at 10:18 am
    What I want to know is why an individual cannot buy say 50 tonnes of carbon and then pay no green taxes on their electrity supply for many years on the basis that they are carbon neutral and can offset the carbon bonds against CO2 emissions resultant from the energy used. Indeed, why can’t it be off-set say against air travel thereby avoiding the green taxes that the government levies on air travel, or perhaps patrol and the green taxes levied on that etc..

    I pay at least £1,000 per year in green taxes on my electrity supply so it would make good financial sense to stock up on say 10 tonnes of carbon bonds and pay no green tax. . .
    *************************************************************************************8
    You know, you may be on to something there… what country are you in? Ask some counsel about it, see if you can’t stir something up.

    It would be pretty funny to wait until it drops to pennies per ton, then drop a c-note and just call it good for life.

    I mean, it would be a waste of a hundred bucks, but it would be pretty funny. Justify an amount based on how much you value entertainment (anything that beats $5/hour is a good deal in my book, using ~$10 for a ~2 hour movie as a baseline value standard).

  28. A.D. Everard says:

    2013 – unlucky for some.

  29. Sun Spot says:

    The EU is desperate to jettison their anti-carbon faith, letting the carbon exchange collapse is step one in the CO2 reformation.

  30. Mickey Reno says:

    You can’t have a religion based around Climate Scientology unless there’s some sort of hell, so burn in hell, all you evil automobile drivers (and bus or train or airplane travelers), you evil people who have warm houses during this cold winter, you evil eaters of food grown more than a mile from your homes, and worst of all, you evil climate deniers who refuse to buy Climate Papal indulgences. Pope Hansen is very displeased! Cardinal Mann requires your penitence. Friars Jones and Trenberth order you to flail yourselves.

    /sarc (just in case, although I hope it’s not really needed in this instance)

  31. Peter Miller says:

    Now down to €3.31, that’s a 10.3% drop today.

  32. Matt says:

    The problem with the “carbon trading” markets is that they aren’t trading carbon, or even carbon dioxide, both of which are valuable raw materials for all sorts of industrial processes. What they are trading is indulgences which have no inherent value.

  33. H.R. says:

    I’ve got a buy order for $50USD worth of credits when the price hits a nickel a ton. That oughta last me ’til I’m dead and gone. Well that, or I can insulate the attic with the certificates.

    What to do… what to do… tough choice.

  34. DirkH says:

    Sun Spot says:
    January 31, 2013 at 11:34 am
    “The EU is desperate to jettison their anti-carbon faith, letting the carbon exchange collapse is step one in the CO2 reformation.”

    I’ll believe that when they jettison Hedegaard.

  35. thunderloon says:

    Chris Beal @NJ_Snow_Fan says:
    January 31, 2013 at 7:14 am

    ENRON ENRON all I can Say. Lock them up.

    http://en.wikipedia.org/wiki/Enron_scandal


    … don’t need to, I was living in Atlanta when a family was billed $140.00 for keeping a single pilot light lit for a month.

    Carbon trading is just a joke, the way they go about it is equivalent to selling shares in a company then using the money as start-up funds. There’s no production or efficiency report. It simply becomes an investment scam.

  36. Silver Ralph says:

    >>Can someone please explain to me how this was supposed
    >>to work initially? That people should pay someone for the right
    >>to burn carbon?

    The idea was not unlike conventional money supply. However, the flaw in this carbon-money system is that any old lying scammer in the Third World could claim they were saving the planet (planting trees, cleaning up industry, stopping cows farting) and thus print new fiat (imaginary) carbon-money.

    It was designed to fail because it was designed by idealists, and fail it will.

    You might say the same about the Euro. It was designed to fail because it was designed by idealists, and fail it will.

    .

  37. Gerry, England says:

    And I still get spam email trying to get me to sign up to the scam!

    Given that the eurozone part of the EU is sinking into recession, it’s no surprise CO2 output is dropping. Then add in outsourcing production to non-CO2 scamming countries like China, India and even to the US since the fracking revolution cut gas prices, although Obama is committing to wreck that. Europe – continent not EU – I understand doesn’t have great potential for fracking. Britain – island separated from Europe by moat dug by ancients – does have huge potential if only we weren’t governed by morons both in Westminster and Brussels.

  38. ntesdorf says:

    It’s one of those rare cases where seeing something go bankrupt is very good news for all the people. It is even good news for the Warmistas, although, of course, they do not realize it yet.

  39. pat says:

    into the Deutsche Bank void???

    INTERVIEW: World Bank eyes spring launch for new carbon fund
    LONDON, Jan 31 (Reuters Point Carbon) – The World Bank aims to launch a new carbon fund this spring after it was delayed almost a year because falling carbon prices made it harder to raise cash, a senior official at the bank told Reuters Point Carbon..

    http://www.pointcarbon.com/news/1.2162479?&ref=searchlist

  40. Eric Worrall says:

    Carbon trading is the only market in which fraud benefits all participants.

    Sellers benefit because they get to make money for nothing, selling fake carbon permits.

    Buyers benefit because a flood of fake carbon permits keeps prices down.

    The only people who are disadvantaged by carbon fraud are the greens – and who gives a stuff about them?

  41. Brendan says:

    Spare a thought for us dunces from down under. Our Government’s Carbon tax is locked into the EU’s price from 2015 and has been done on a predicted price of $29 a tonne. That price has been used to pay compensation to the usual key groups of voters.

    Clever

  42. DirkH says:

    Gerry, England says:
    January 31, 2013 at 12:47 pm
    “Europe – continent not EU – I understand doesn’t have great potential for fracking.”

    You are wrong. France, Germany and Poland at least have significant resources. All blocked by green activist policies. Except maybe in Poland.

    The EU greens have traditionally been the KGB’s shocktroops as the Russians recognized in 1980 that infiltrating the young green movement would be much smarter than continuing to try to keep Eurocommunist groups up. Trittin, Fischer, Roth, Kretschmann – leaders of the German Greens – were such infiltrators, moving from communist groups into the Green/antinuclear movement and quickly purging the party from non-leftist elements, aligning it with USSR interests.

    So the European green opposition to shale gas plays into the interests of Russian gas exporters.

    Fracking itself has of course been used for decades in Germany to get at oil in Lower Saxony; only the horicontal drilling is new, and through all the decades the Greens have never said anything about fracking because the oil gained was simply too little to disturb Russian interests.

  43. James Ard says:

    Silver Ralph, I would say idealists is much too kind of word. And it’s past time to start calling the spades the spades.

  44. Simon says:

    Wouldn’t be surprised if the BBC Pension Fund have investments in this. For them to lose on this is hard on the BBC employees, but just might trigger a change of heart at the organisation, forcing it to re-evaluate its currently overtly biased position wrt CAGW. Then again, pigs might fly, as the common reaction to something failing is for the supporters to try even harder to change the outcome (Einstein’s definition of insanity?)

  45. RoHa says:

    If the Big Money boys with the nasty haircuts aren’t making big money, we will stop hearing about CO2 driven Climate Change very soon.

  46. I. Lou Minotti says:

    No wonder Algore is hitting the talk show circuit promoting his new book! (As if he needs a few more bucks–does Algorezeera Currently come to mind?) Maybe Obama and Maurice Strong will soon join him on his book tour, seeing as the Chicago Climate Exchange is likely the next domino to fall.
    http://www.canadafreepress.com/index.php/print-friendly/9629

  47. mfo says:

    As most people know there is a huge glut of carbon dioxide allowances (permits to emit 1 metric ton of carbon dioxide) in the European Union. Therefore supply vastly exceeds demand which is causing the price of allowances to collapse.

    The EU emissions trading scheme (or scam) is worth 54 billion euros ($73 billion). The cap and trade program in the EU does not allow a price floor (or ceiling), so with further allowances being added to the massive oversupply, the allowances could actually end up being worth nothing at all.

    The European Commission, the unelected body which effectively controls the European Union, has come up with a scheme to artificially raise the price of allowances called backloading. This means that the EU would postpone selling 900 million new carbon allowances due to be sold during 2013-2016 until 2019-2020.

    Connie Hedegaard the EU Climate Commissioner is beginning to panic. The European Parliament’s Industry, Research, and Energy committee has voted against the proposal to withhold allowances from the market. Yet another committee, The Environment Committee, is due to vote on February 19. After which representatives of the 27 member states will also have a vote.

    Connie Hedegaard has stated: “The alternative to a well-functioning carbon market is hardly that the EU member states will make it cost nothing to pollute.”

    She claims that if backloading is not agreed, the regulation of carbon dioxide emissions will have to be re-nationalised by each individual member state using 27 different regulatory systems and taxes.

    For backloading to be put into effect it requires a qualified majority of 255 votes from the member states out of a total of 345. Therefore only 91 votes could block the proposed change in the EU’s emissions trading law.

    A number of EU states are either undecided or have expressed concern. For instance Marcin Korolec, Poland’s Environment Minister, has stated that backloading amounts to market manipulation.

    The 8 EU member states which have expressed misgivings about backloading are Poland, Germany, Czech Republic, Greece, Portugal, Hungary, Cypress and Malta. The number of votes each country has varies, but they total 111 and so together could block backloading.

    Carbon prices would crash and buyers would be able to buy carbon dioxide emission allowances at their true value, zero.

  48. timbrom says:

    I. Lou Minotti says;

    I don’t think you’ll see Strong on tour any time soon. Someone might like to correct me, but I seem to recall that the boys in blue are looking to feel his collar over the Iraq Oil for Food scam.

  49. H.R. says:

    Eric Worrall says:
    January 31, 2013 at 1:46 pm

    LOL! It’s worth a re-read.
    (And I might add… the really stupid greens lost their shirts.)

    Thank you, sir!

  50. michael hart says:

    They’re gonna need a bigger boat.

  51. TBear says:

    What does WUWT think about Paris going back to the Dark Ages by turning city lights out, after 7.30pm, to decrease carbon emissions! WTF?

  52. I. Lou Minotti says:

    timbrom replied:
    “. . . the boys in blue are looking to feel his collar . . ,” and you may be right. However, Mr. Strong recently appeared in Canada before Rio + 20, and there have been no reports of the RCMP falling over themselves to apprehend him. And doesn’t the United States have an extradition treaty with our neighbors north of the border?
    http://www.canadafreepress.com/index.php/article/46420

  53. wws says:

    I think Paris is claiming they’re turning lights off to reduce emissions, but in fact they’re turning the lights off because they’re broke and they’re scared to death to admit it.

    Detroit’s been doing the same thing, but everyone knows they’re broke so they haven’t had to lie about why.

  54. Larry Ledwick (hotrod) says:

    What does WUWT think about Paris going back to the Dark Ages by turning city lights out, after 7.30pm, to decrease carbon emissions! WTF?

    I am sure someone over there will also be shocked when they discover that there has been a sudden increase in crimes in the evening hours after the lights go out.

    Larry

  55. Tim B says:

    But how’s the Tulip Market doing?

  56. David says:

    As I’m a simple soul, what I want to know is this:
    How does all this fit in with Germany (the ‘poster boy’ of all things Green) building 21 new coal-fired power stations..? Are we supposed not to notice, or something..?
    (Not even coal, it seems, but lignite – brown coal – which is the most polluting fossil fuel on the planet..)

  57. Gordo says:

    They can always find their way by the light of burning cars

  58. thelastdemocrat says:

    Gordo FTW.

  59. Bush bunny says:

    Someone tell the Australian government will you please!

  60. rogerknights says:

    What does WUWT think about Paris going back to the Dark Ages by turning city lights out, after 7.30pm, to decrease carbon emissions! WTF?

    I thought it was supposed to be ‘the city of light” (or “lights”)
    Now it’s the city of lights-out.

  61. bushbunny says:

    I expect everyone knows that in summer, it is light in Paris until about 9.45 pm sometimes as it is in UK. Or rather England, up north they are in the land of a midnight sun, and longer daylight hours. They are saving on electricity prices and also of course they don’t want to put extra work for their nuclear reactors in hot weather, that happened during a heat wave twenty years ago. They nearly had to shut one older one down, as it was during a drought, and the water cooling system was stretched so much it nearly reached danger levels.. What about Germany eh, building 21 coal generators, brown coal of course. And two wind turbines collapsing in Devon and Cornwall, the authorities reckon it was sabotage. Others reckon these structures collapsed in only 50 mph wind. Less than gale force. They want to come to Aussieland we have cyclones here.

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