In an age of plunging share prices and markets going tits up, it appears that even the vital element carbon is now almost worthless.
On Thursday of last week, the price of EU permits to emit a tonne of carbon fell to a record low of €8.20. This is less than one third of the trading price around six months ago, and the fall can be attributed to companies selling off their emissions permits to raise cash.
Point Carbon predicts that the permit price will rise to around €24 by 2012, as companies who fail to radically reduce their carbon emissions are forced to buy back permits before the end of the trading scheme. But the state of the carbon market overall indicates a far deeper problem.
Many environmental economists argue that carbon trading was doomed from the start. Combining carrot with little more than a twig, emissions trading operates in a pseudo-market in which the initial allowances were set arbitrarily high. Relying on this voodoo economics now threatens Europe’s chances of meeting its emissions target for 2020.
And unfortunately it’s not just Europe flogging this dead horse. Shiny new US president Barack Obama is also committed to the “cap and trade” approach to carbon emissions.