EU carbon market has collapsed

[rfkrfk]

just heard on BBC radio, sorry no link yet,
it is supsected the EU gave away too many credits.

here is the chart of price

http://www.climatecorp.com/pool.htm

[Dunvegan]

1. Ouch!

Something plunging faster than Bush's ratings? Stunning.

[Trajan]

2. Tell this layman: What does this mean ?

[upi402]

3. Kyoto treaty reduces carbon output to a target level

output amounts are traded from one to another -for remuneration. Like cash maybe? I think that's how it works. Not an expert.

[Viva_La_Revolution]

4. Hello you!! Here's some basic info....

EU carbon trading scheme in disarray
Posted at 4:43pm on 13 May 2006

A European Union scheme set up to to cut greenhouse gas emissions is facing disarray, after it emerged the data it is based on is faulty.

The aim of the emissions trading scheme was to cap the amount of carbon dioxidie released by industry by making heavy polluters to buy permits from more environmentally friendly industries. It was thought this would begin to put a price on greenhouse gas pollution.

But because there was no comprehensive data on how much carbon dioxide each firm released in the past, national governments and the EU had to rely on information supplied by industry itself.

It now appears that - with the exception of Britain - most European countries are emitting far less carbon dioxide than they have allowances for.

This has left the EU awash with surplus pollution permits which governments have handed out free

http://www.radionz.co.nz/news/latest/200605131642/148e09a

[Poll_Blind]

6. Oh damn, I had no idea the industry had inflated their numbers.

What assholes.

PB

[Trajan]

8. Hey Sweets .....

THANKS for the info .... I have been remiss in keeping up with everything going on in the entire world at all times in every way ... So I have to rely on my DU friends to keep me edumacated .....

Gonna be a GREAT weekend in the NW ! .... VIVA LA REVOLUTION !

[Viva_La_Revolution]

9. see, I'm lucky... being unemployed and all... plenty of time to keep up

I do love DU. :)

72 tomorrow, 80 on Sunday and 93!! on Monday!
http://www.kptv.com/global/weather.asp

Stay cool my friend. :)

[Poll_Blind]

5. Why this is great news - an explanation...

With pollution a worldwide concern certain governments or groups of governments have enacted strong regulations of how much of a certain pollutant, in this case carbon, may be emitted per year by a given business. However, not all businesses pollute equally and some do not use all of the pollution credits they are allowed per year. They are allowed to sell these credits with other companies who will exceed the amount the government or treaty allows.

This allows large polluting corporations to purchase the right to spread more pollution than they should. However, the amount of pollution remains the same overall. These credits trade on a market just like stocks- they go up in price when there is high demand or down when there is not.

Now, this could be good or bad news depending on the reason. However, from this link, the reason appears to be:

Data made available in the CITL today showed that companies covered by the EU emissions trading scheme emitted 67.5 million tonnes CO2 less than they were allowed in 2005. The reason for the drop appears to be that companies are not emitting as many expected pollutants, the price of emission credits falls rapidly.

Some people who bet on corporations using lots of pollution credits and polluting lost money. I'm not going to loose so much sleep over their finances.

Air-breathers win this round!

DISCLAIMER: This is in Europe. Don't expect anything so silly to happen in the United States anytime soon.

PB

[Poll_Blind]

7. Ugh, read post #4. 8^(

PB

[rfkrfk]

10. how is this good?

the flim-flammers set some totally bogus number,
them, not unexpectedly,

they make the target, and then some.

here is how it works, fictional numbers,
suppose some larger country has emitted, in 1000s metric tons,

2004... 900
2005... 950
3006... 1000 expected

goal is a 20 percent 'reduction' for year 2006.
target is 1250.

if 2006 emissions are as expected, 1000, the country has 'reduced'
its emissions by 250

edited for typo

[philb]

11. If there is no penalty for producing CO2, why would one want to buy a cred

it?

How does their system work? Is there a limit on the amount of CO2 allowed emitted?
And credits to allow that much emission? If as many credits are issued as utilities and businesses desire to emit CO2, there would be no value in the credits.

Is there reason to conclude that the externality cost of CO2 is low? or that the cost of CO2 sequestation is low?

How do they determine that a CO2 sequestation project is really sequestering the amount of CO2 promised?

[rfkrfk]

12. the limits apply only to some industries...

individuals, and aviation, perhaps other industries,,
are exempt.

how does it work?
a particular company tells the gov't how much
CO2 it emitted in the past

the gov't makes up a number, example, '20 percent reduction'.
the companies get 80 percent of what they said they emitted, in credits.

companies tell how much CO2 they emit now,
companies can sell excess credits to speculators

keep in mind that the system produces no gov't revenue
at the current time, as there are sufficient credits for everyone.

because the system produces no revenue, enforcement is zero.
the only thing the gov't can do is toughen the target-number, for
future years.

this arrangement has the advantage that
any comapany wanting to sell credits, can
adjust their claimed emission number.

everybody wins.
companies raise money by selling credits,
Countries meet their target-reduction number,
very low enforcement/admin costs.

edited for typos