I wonder how long before flatlining occurs, like last year with the Chicago Climate 
Exchange (CCX):
Even the Guardian is covering this “failure” of carbon markets. They write:
The international market in carbon credits has suffered an almost total collapse, with only $1.5bn (£916m) of credits traded last year…
Now that the Kyoto protocol is essentially dead, the economic markets will surely pull life support for carbon trading with no political support in place for emissions reduction. With this report and news coverage, you can hear the traders already running for the exits.
Then there’s this from Reuters – The Europe Union’s carbon market could be flooded with excess pollution permits over the next decade, cutting prices in half and depriving governments of billions in budgeted revenues, EU sources say
Growth in Global Carbon Market Pauses Amid Uncertainty
Press Release No:2011/514/SDN
World Bank Releases 2011 “State and Trends of the Carbon Market” Report
Barcelona, June 1, 2011 – The World Bank’s annual review of the global carbon market shows that 2010 was a watershed year as the market ended five years of robust growth with a slight decline compared to 2009. The State and Trends of the Carbon Market 2011, released today at Carbon Expo in Barcelona, shows that the total value of the global carbon market was estimated to be US$142 billion last year.
The report’s authors noted that several reasons help to explain the decline, including the continuing lack of clarity about the market after 2012 and the loss of political momentum on setting up new cap-and-trade schemes in several developed economies. Some buyers from industrialized countries, which in previous years had reached or surpassed targets, consequently made fewer purchases in 2010. As well, lingering effects of the recession in several industrialized countries led to lower greenhouse gas emissions, easing emissions reduction compliance obligations.
Furthermore, the primary Certified Emission Reductions (CERs) market, which accounts for the bulk of project-based transactions, fell by double digits for a variety of reasons, including lower demand for credits and competition from more predictable assets (Assigned Amount Units and secondary CERs). The CDM market is now at its lowest level since the Kyoto Protocol entered into force in 2005, having dropped by 46% to an estimated US$1.5 billion in new project-based transactions. Similarly, other carbon markets also declined or stayed at their plateau. Nevertheless, cumulatively, primary offset transactions have reached almost US$30 billion since 2005 and are expected to have catalyzed much larger resources, mostly from the private sector.
“The global carbon market is at a crossroads. If we take the wrong turn we risk losing billions of lower cost private investment and new technology solutions in developing countries,” said Andrew Steer, World Bank Special Envoy for Climate Change. “This report sends a message of the need to ensure a stronger, more robust carbon market with clear signals.”
State and Trends of the Carbon Market 2011 shows that, relative to each other, EU Allowances (traded under the EU Emissions Trading Scheme, ETS) remain the largest segment by far, with 84% of the total value of the carbon market. Taking secondary CDM transactions into account, the value of the market driven by the ETS reached 97% of the global market value.
The authors of the report predict that, in the next two years, the difference between gross demand for and the cumulative supply of carbon credits generated under the Kyoto flexibility mechanisms will be slightly less than US$140 million. Virtually all demand will be from European governments. Beyond 2012, although the potential demand for emission reductions could reach 3 billion tons or more, the only substantial and unconditional demand to date comes from Europe, estimated at 1.7 billion tons. The supply available between 2013 and 2020, through existing projects, is seen as sufficient to fill that demand, leaving little incentive for project developers to invest further and create a future supply of emission reductions.
The fall in market value was contrasted with what was generally seen as the successful outcomes of negotiations at the UN climate change conference in Cancun in December which resulted in relatively more positive market sentiment.
Although some opportunities for strengthening regulatory frameworks were missed in industrialized countries, national and local low-carbon initiatives gathered strength and offered hope.
“Carbon market growth halted at a particularly inopportune time: 2010 proved to be the hottest year on record, while global emission levels continued to rise relentlessly,” said Alexandre Kossoy, World Bank Senior Financial Specialist. “At the same time, other national and local low-carbon initiatives have picked up noticeably in both developed and developing economies. Collectively, they offer the possibility overcome regulatory uncertainty and signal that, one way or another, solutions that address the climate challenge will emerge.”
In the face of lagging demand, the World Bank has undertaken a number of initiatives to give confidence to a post-2012 carbon market. The Partnership for Market Readiness, launched in Cancun in December 2010, aims to support the trend of national mitigation efforts using market approaches. A number of the World Bank’s carbon funds and facilities, such as the Carbon Partnership Facility, the second tranche of the Umbrella Carbon Facility, and a new facility for low-income countries currently under development, also respond to future needs by supporting scaled up mitigation and purchasing carbon credits beyond 2012. Furthermore, the Forest Carbon Partnership Facility is supporting REDD+ initiatives which, to date, have not been included under the CDM. The Bank sees carbon markets as an important and versatile tool to provide incentives for a shift to lower carbon development paths.
State and Trends of the Carbon Market 2011 was released at CARBON EXPO 2011, the largest carbon fair in the world with more than 3,000 representatives from governments, private sector and civil society organizations involved in greenhouse gas emission reduction transactions around the world.
For more information on the World Bank’s carbon finance activities and the electronic version of this report, please visit the website: www.carbonfinance.org
Theo Goodwin says:
June 2, 2011 at 8:28 am
Come on, people, don’t be so joyless. It is a hoot to hear that only European governments are buying this worthless crop”
Theo . . . you may have just discovered the solution to the Euroland sovereign debt crisis.
EuroCarbonCredits . . . the new Greek Drachma 🙂
In an extraordinary article in Aviation Week and Space Technology Ulrich Schulte-Strathaus the secretary general of the Association of European Airlines complains that the EU ETS has become just another tax on European Airlines that will disadvantage these EU airlines versus non European airline companies. He says that the EU needs to start over on its CO2 trading schemes to address these problems. It is truly astounding that only now does the secretary general see the EU ETS as just another government taxing scheme.
The EU has been unbelievably arrogant in pushing carbon trading schemes and proud of leading the world in such completely unjustified nonsense based on its biased and unwavering support of climate fear hype. With the rest of the world finally moving away from these idiotic tax schemes the EU is now stuck with its politically contrived carbon trading schemes where governments have become accustomed to and planned on future massive carbon taxes to fill their coffers. The EU can continue to proceed on this idiotic path but only with great economic disadvantages.
This is a very positive outcome for the rest of the world and may even help get the EU to get their collective heads out of the sand regarding the fraud of the CAGW theory.
The Goracle got out at the top, IIRC, leaving everyone else holding the bag.
If he didn’t absolutely shatter The Golden Rule, he surely bent it beyond all recognition.
“I can calculate the movement of the stars, but not the madness of men.”
Sir Isaac Newton on the collapse of the South Sea Bubble.
So the very politicians who are relying on “budgeted revenues” from carbon trading are the same ones that pay for research that supports the need for carbon trading. I can smell a rat a mile away, and this one has a particular political stench to it.
Maybe not the right forum, but here is some facts I learned while learning to brew beer. Beer is best with CO2. To put CO2 into the beer, you can add sugar at bottling and let the yeast metabolize it and add CO2 or keg it under CO2 pressure and wait a few days. When I open a beer, some CO2 disolves out and eventually will be at a certain level, though some will always remain in the beer.
To me, (the ocean is huge); therefore, It’s the OCEAN and we can not effect CO2 levels. Am I wrong on this?
The smell of rotting carbon credits is unmistakable. Perhaps it was the muddied waters they flowed down in the hottest evah while Global Warming causes Global Cooling. That’s just how the business world works: you miss a step, you’re on the menu.
RockyRoad says:
June 2, 2011 at 11:51 am
So the very politicians who are relying on “budgeted revenues” from carbon trading are the same ones that pay for research that supports the need for carbon trading. I can smell a rat a mile away, and this one has a particular political stench to it.
======================================================
I believe we have a winner…………
Will California go through with its own carbon trading scheme? Economic suicide. I’ll bet that won’t stop Sacramento and Uncle Jer. The ability to gain total control over an entire state of 38 million people is too tempting.
I wish I had the patience/guts to act dumb about investing in carbon credits 8 years ago and do what Gore did. Early retirement is always something to keep an ear out for.
Unfortunately my psyche has a low tolerance for additional internal hypocrisy.
From TheGuardian link above:
“The international market in carbon credits was brought about under the Kyoto protocol, as a way of injecting much-needed investment into low-carbon technology in the developing world.”
In other words, Kyoto is simply a means to redistribute wealth from the North to the South.
Let me add some corrections:
“The Europe Union’s carbon market could be flooded with excess
pollutioncarbon dioxide permits over the next decade, cutting prices in half and depriving governments and blood sucking financial traders of billions in budgetedrevenuestaxes on the air we breathe, EU sources say.”Latitude says:
June 2, 2011 at 10:52 am
“You guys do realize that the people that set this up…
..did not think for one minute that we would actually reduce our emissions, did you?”
The idea was to control the amount of emissions by reducing the number of permits gradually. A KNOWN side-effect is that all the renewable energy production in Europe by definition does not reduce the emissions by one jot as the number of permits on the market is not reduced by them; they just make more permits available, thus pushing down the prize. So all the Germans who voluntarily switch to an energy provider that offers all-green energy with zero CO2 emissions (and pay even more outrageous prizes than the rest of us) do not actually reduce overall emissions by their money squandering feelgood gesture; but they make coal fired power plants more profitable through their action.
Wonder what they would say if they understood supply & demand.
from the original post:
“cutting prices in half and depriving governments of billions in budgeted revenues”
If the plan worked, emissions would be reduced and the value of the market should fall to zero. Why would they budget for failure?
and this:
“This report sends a message of the need to ensure a stronger, more robust carbon market with clear signals.”
Didn’t Tsun Tzu say that it’s not smart to reinforce defeate?
“The supply available between 2013 and 2020, through existing projects, is seen as sufficient to fill that demand, leaving little incentive for project developers to invest further and create a future supply of emission reductions”
Ah, so the plan worked and it can stop now? hmmm, or was the plan supposed to be that the carbon market would be a never-ending fountain of cash, with impossible goals that keep the cost of credits high forever? Yup, that was the plan I think.
@ur momisugly Brian H says:
June 2, 2011 at 10:28 am
Heh. Have a look at the comments. Salon’s progressive readership is going ballistic! They don’t seem to be addressing the issue of the Invisible (Iron) Hand of the market, which will enforce affordable energy, by granting survival to those who use it, and the opposite to those who don’t.
I read some of them earlier today. I think the word “apoplectic” accurately describes the vast majority of the posters. I’m certain that Mr. Lind will be on the receiving end of a avalanche of death threats and other unkind remarks. Articles like this do tend to bring out the easily exercised true believers.
Hoser is right. California is committing economic suicide.
Will they bailout the struggling Carbon Markets, or will they bleed the remaining cash out of it with millions of trading fees?
DirkH says:
June 2, 2011 at 1:00 pm
The idea was to control the amount of emissions by reducing the number of permits gradually.
===========================================
never…..
The plan was to make money.
They never had any intention of reducing emissions. That would make them less money.
DirkH says:
June 2, 2011 at 9:12 am
“Here you go.
http://ec.europa.eu/commission_2010-2014/index_en.htm”
Oh…My…God! Every one from Central Casting! Go, Josh, Go!
I feel for you, Dirk. Life in Germany must be hell.
So far as I know, there are no trade embargos between US and Australia. Will I be able to buy carbon at 5 cents a ton on the CCE and sell it in Australia for $10-$40 per ton, once Gillard makes up her mind ?
Latitude says:
June 2, 2011 at 1:45 pm
“never…..
The plan was to make money.
They never had any intention of reducing emissions. That would make them less money.”
By making the permits scarcer over time, you drive up the prize; the European governments wanted to do both, make money AND reduce emissions. AFAIK only last year did the German government begin to auction off some of the permits; the plan was to auction off a greater fraction each year, and reduce the fraction that goes to industry as free allocation.
Do not underestimate the naivity of European politicians; they are not only power hungry b*stards but also True Believers. They really do think they can rig a market and get away with it. They really did believe the Euro could work. I think they still do.
Good luck hiding this decline.
Sadly New Zealand is still fully subscribed to the Kyoto lunacy. While I am glad to see that the decline in the price of credits should make this less costly than was expected, I am very frustrated that even in an election year none of the major political parties have the guts to mention Kyoto at all.
Meanwhile a post industrial junkyard of hundreds of truly massive wind turbines is about to be built on the range of Hills to the west of where I live. Now if anyone can make wind power economic it would probably be New Zealand. We have some pretty damned clever engineers and New Zealand is an extremely windy place located down in the roaring 40’s as we are. However I hope that money to dismantle these monsters when they reach the end of their lives has been put aside somewhere otherwise future generations are going to be faced with an awful mess.
Mining companies are required to set aside funds to clean up after themselves. Wind generators should face the same requirement. And if that makes wind generation uneconomic then so be it.
No doubt various pension funds will have ‘invested’ in this BS – and of course, who will end up out of pocket???
The predictably inevitable outcome of a false market.