What price carbon? The answer, or course, is a function of supply and demand - both of which have recently conspired to lead to a low price for carbon on the European market. A decision by the European Commission to forgo (for now) reducing the supply of emission credits (a failure to support carbon trading?) has contributed to continuing declines in the carbon price. From the Economist:
The GFC, slow economic recovery, and austerity seem to have conspired to keep demand for credits down by reducing economic activity while supply has been more than sufficient because the EU gave away too many credits in the first place. This has serious implications in countries like Australia, which have enacted carbon taxes (while using that income to address their regressive nature) that are or will be linked to the ETS. Some in Australia are forecasting huge budget deficits.
China seems to be the place emissions go to be emitted. Perhaps the emerging Chinese carbon trading system will bolster prices?
The GFC, slow economic recovery, and austerity seem to have conspired to keep demand for credits down by reducing economic activity while supply has been more than sufficient because the EU gave away too many credits in the first place. This has serious implications in countries like Australia, which have enacted carbon taxes (while using that income to address their regressive nature) that are or will be linked to the ETS. Some in Australia are forecasting huge budget deficits.
China seems to be the place emissions go to be emitted. Perhaps the emerging Chinese carbon trading system will bolster prices?
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