Emissions Trading isn’t working and may be dangerous

While we wait to hear in October whether the EU will be extending emissions trading to international aviation it is worth reflecting that the cost of carbon pollution  is very low. Not much of an incentive.

On the carbon offsetting website Terrapass you can buy a metric tonne for $13.12

EU Allowances (EUAs are trading at around €5.5 as I write this

For the background on the EU ETS

As they argue

“By putting a price on carbon and thereby giving a financial value to each tonne of emissions saved, the EU ETS has placed climate change on the agenda of company boards and their financial departments across Europe. A sufficiently high carbon price also promotes investment in clean, low-carbon technologies.”

I’ve placed the difficult bit in bold.

The allocation of permits has now been centralised to avoid excessive generosity at the national level, in 2005 a number of countries revealed that the allocated allowances were greater than actual emissions and in May 2006 prices fell to under €10 per tonne. By March 2007 carbon permits were trading at under €0.10 per tonne.

In March 2012 the Economist reported that he EUA permit price under the EU ETS had “tanked” and was too low to provide incentives for firms to reduce emissions. The permit price had been persistently under €10 per tonne compared to nearly €30 per tonne in 2008.

Uncertainty about the future price of carbon pollution reduces the incentive for businesses to invest in carbon reduction.

Current international prices can be found on the International Commodities Exchange ICE.

You can follow the price at Point Carbon

There is speculation about how the EU will respond to moves by ICAO – but we will probably not know until mid-October.

Read more on Blomberg

The road to hell is paved with good intentions:

As Monbiot argues

“While natural capital accounting empowers the moneymen, it disempowers the rest of us. That’s one of the reasons why governments like it. Who needs all that messy democratic decision-making, those endless debates about intrinsic value and beauty and wonder if you’ve already determined that the meaning of life is 42? And who can gainsay the decision to pulp a forest or blast a coral reef, if the value of the destruction turns out to be worth several times 42? Once we have ceded nature to cost-benefit analysis, we can’t complain if we don’t like the results”