At one stage I thought that an emissions trading scheme was probably the best way of moving away from a carbon economy, but the real world says it isn’t.
Federal parliament today sits for the first time this year and one of the issues on the notice paper will be a bill aimed to establish an ETS – what the government calls a Carbon Pollution Reduction Scheme. They would be best advised to look at just what is happening to the EU’s ETS.
BusinessGreen.com reports:
“The price of carbon has fallen by nearly 70 per cent since reaching a high of €32.90 in April 2006 to a new low of €10.81 last week, although it recovered this week to just under €12.”
Which means:
“Many projects to reduce carbon in the UK and the developing world – which are partly funded by being awarded carbon credits which can be sold on carbon markets – now face financial trouble because these credits are worth less on the carbon market”
With one particular example:
“Paul Golby, the chief executive of E.ON told the financial times earlier in the week that the finances of the London Array, a planned 1,000MW wind farm in the Thames estuary, are “on a knife edge” , partly because of the falling price of CO2 emissions permits.”
In other words, the rate of replacement of power which generates CO2, with power which generates less, stalls when economic growth dips. This means that abatement is captive to economic circumstance, and any timetables set down for reduction of CO2 will wax and wane along with growth.
This is unless government very actively varies the number of permits on offer. But if they don’t get that right then they risk either strangling economic growth when it comes back, or failing dismally to meet their emissions targets.
It also has the power to turbo-charge the decline in companies’ values when a recession does hit. Most large companies will have carbon permits on their balance sheets, and on the figures above they look like a very volatile asset class.
If governments feel that they should do something, then it is increasingly looking like a straight carbon tax is the way to go. That is if you really want to do anything while the bulk of the world does nothing. California is now reaping the whirlwind of going it alone in the US as the Wall Street Journal reports.
Let’s hope that today’s promise of “green” jobs doesn’t mirror California’s as well!
Graham
Don’t you think that their should be a proven causal link between carbon (dioxide) and Global Warming before any attempt is made to try ” moving away from a carbon economy?”
Vostok Ice core samples have shown that rise in CO2 follows – not causes – warming.
For heaven’s sake, let’s not put strains on budgets and jobs at risk on a theory not proven, even after twenty years of research.
Comment by Taluka Byvalnian — February 3, 2009 @ 9:58 am
Taluka, I think there is a good case for phasing out carbon based energy over a period of time because it will run out some day.
Better to bite the bullet and deal with that before it gets any more critical.
I think it is well established that CO2 is not the main driver of climate and plays a secondary role, and the Vostok core samples are one demonstration of that. But that doesn’t mean that CO2 doesn’t moderate climate as well.
I suspect that 2 degrees of warming is somewhere around what you would get, and that this would be beneficial to human life over the long- and short-run. However, it is possible that there are negative feedbacks that mean that 2 degrees will never be reached on the back of CO2. (2 degrees is based on a simple physics model, so not just a guess).
So I come to the same conclusion as many of the greenies about the need to change (although my time horizons are much longer) but by an entirely different route that doesn’t involve doing violence to the facts and the science.
Comment by Graham Young — February 3, 2009 @ 10:38 am