The Great Carbon Collapse

Patrick Bell / February 25, 2009

In the UK Guardian last month, a leading European energy executive warned that Europe’s carbon market was becoming a “new type of sub-prime tool.”  More analysis from the article:

The EU’s emissions trading scheme was set up as a market solution to cut greenhouse gas pollution from industry. Polluters were issued with permits that can be traded between companies and countries as a way of encouraging an overall reduction in carbon output. However, companies are now cashing them in. Up to €1bn-worth of permits are said to have been sold off in recent months as companies see an opportunity to bring in funds at a time when their carbon output is expected to fall due to lower production.

This week, Guardian columnist Julian Glover writes that the carbon market is on the verge of total collapse:

Set up to price pollution out of existence, carbon trading is pricing it back in. Europe’s carbon markets are in collapse. (more…)