EU Green Policies And ETS In Crisis
The European Union is fast approaching the point of no return, the Euro zone is in economic meltdown as the debt ridden economies of Greece, Italy, Portugal and Spain threaten to wipe out the Euro, and global confidence in the currency continues to decline.
With the EU teetering on the brink of a recession the last thing the EU needs is a trade war with the rest of the world, which is exactly what is likely to happen over the EU tax on flying that is due to start on January 1st 2012.
The Green flying tax is part of the EU Emissions Trading Scheme which has seen the price of carbon fall to an all time low of 6.4 Euros per tonne:
Europe’s main weapon in the battle against climate change is now fighting for its own survival.
In early January, investors in the continent’s cap-and-trade system still had to pay some euro14 ($18.30) for the right to emit one ton of carbon dioxide into the air. By last week, the price of one emission allowance had tumbled to a meager euro6.41 — making it much cheaper to pollute and slashing the financial incentives for companies to invest in low-carbon technologies.
Analysts warn that the prospect of another recession in the debt-ridden continent, and the accompanying decline in emissions, could push prices below euro2 by the end of next month.
The troubles in the carbon market, a system being watched closely from California to China, is linked to the struggles of Europe’ other ambitious project, the euro. And just as financial investors have looked to the European Central Bank to save the currency through massive intervention in the bond markets, analysts say the emissions market may need similar centralized help.
Globally carbon prices have dropped as the smart money got the hell out of the bursting bubble, in June 2012 the World Bank warned that the Carbon Market was in accelerating decline.
The unelected EUSSR fails to take any of the economic realities into account as it blindly follows Hedegaard and Huhne and their Climate Religion into what will be a deepening economic crisis as not only the Euro will need further bailouts but also the Emissions Trading scheme will need bailing out.
The EU got it wrong, again.
In October, the U.K. government shut down the carbon capture project in Longannet in eastern Scotland in which Shell was one of the partners.
While the prospect of another recession is the main reason for the recent drop in carbon prices, experts say that — just like with the euro — serious flaws in the system are exacerbating the problems and could lead to its failure if they can’t be fixed.
The economic crisis has lowered emissions and thus hit the price of carbon allowances. But the drop has been so dramatic because there were too many allowances in the system to begin with.
To get industry and skeptical governments on board, the Commission set a very high cap for emissions when it launched the carbon market in 2005.
The EU got the allocation of carbon permits so badly wrong that now it is having to withhold 1.4 billion permits to try and force the price of carbon up:
The commission, which oversees the scheme, overestimated the amount of permits the EU’s heavy emitters would need to cover their emissions in the period 2008-12, resulting in over-supply.
The supply glut and concerns about the EU economy have driven prices for EU Allowances (EUAs) down by some 60% over the past six months to a record low of €6.30 last week.
To try and rectify the problem, the commission will tighten the cap on emissions and auction the majority of permits in the third phase (2013-2020), instead of giving them away for free.
Investors and environmental groups renewed calls for intervention, however, saying plans for increased energy efficiency in the bloc would reduce demand for permits, putting more downward pressure on prices. The vote is the first of three ballots that could lead to a cut of 8% in the supply of permits during the 2013-20 trading phase.
This is absolutely priceless, literally, carbon taxes force up the price of everything in the economy as a knock on effect of being passed on to consumers. the system that supports these Green taxes, the EU ETS in turn will need to be bailed out by tax payers so it can continue to function and keep adding a Green tax burden to all EU citizens.
No doubt about it the clowns have most definitely taken over the circus.
Posted on December 21, 2011, in Anthropogenic Global Warming, Church Of Climatology, Climate Change, European Union, Global Warming, Green Lies and tagged carbon prices, economic meltdown, EU Emissions Trading Scheme, Green Taxation. Bookmark the permalink. Leave a comment.