Emissions Trading is not working

If there was ever any real indication of the failure of the use of market mechanism in an attempt to reduce carbon dioxide emissions it is the news that carbon emission brokers have been laid off in large numbers by their broking firms. The recession has cut the amount of emissions being created, rather than measures, and the artificiality of carbon markets has left, in these circumstances a surfeit of carbon saving instruments on the market with very few buyers.

CantorCO2e has laid off its last three remaining emission permit brokers, and Carbon Capital Markets has greatly trimmed its staff.

It seems that according to analysts there will be no demand for emission permits and therefore no demand for the EU emissions allowances until 2013. That effectively means that there will be no large scale new emissions savings measures required by the industries to which emissions control applies, like the electricity generating industry, for more than two years.

The prices of EU allowances reached dizzy heights of 30 Euros in July 2008 and looked set to rise until the recession and banking crisis (and a number of fraudulent activities) got in the way. The Allowances are now trading at around half that price, making it cheaper in real terms to pollute the atmosphere with carbon dioxide. Volumes of trade of Allowances have also fallen significantly.

All this seems to support my original view that the EU Emissions Trading Scheme will do nothing to reduce emissions, although it does offer a casino type gambling opportunity for those involved in the market.

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