Banks move away from emissions trading

So says the Guardian:

Banks are pulling out of the carbon-offsetting market after Copenhagen failed to reach agreement on emissions targets…

Carbon financiers have already begun leaving banks in London because of the lack of activity and the drop-off in investment demand. The Guardian has been told that backers have this month pulled out of a large planned clean-energy project in the developing world because of the expected fall in emissions credits after 2012…

Paul Kelly, chief executive of Eco Securities, which develops clean energy projects, said that while markets had not expected a definitive post-Kyoto Protocol deal at Copenhagen, they had expected some progress.

“The lack of regulatory certainty in the post 2012 world affects the market’s view of what CERs [carbon credits from clean energy projects] will be worth and subsequently will constrain financing for projects. If you had an agreement at Copenhagen with a bit more detail, people would be more willing to take risk.”

While I expect many will see this as a bad sign (indeed the Guardian’s headline is Copenhagen dampens banks’ green commitment, which sounds bad), I am not so sure.

I am inclined to agree with William Connolley who says:

Emissions trading is a waste of time and an enormous waste of money, promoted mostly by those who hope to get rich on it.

Emission trading, carbon offsets, and other similar policies are, overly complex, and ripe for abuse. In other words they are inherently problematic.

We need carbon prices, not quotas.

UPDATE: Thanks to the New York Times I am now toughly confused as to what is happening to carbon markets in the wake of Copenhagen.

The global carbon market is expected to total $170 billion this year, a 33 percent jump from 2009, driven mostly by higher prices in Europe and a growth in the nascent carbon market in the United States, according to a new report from Point Carbon, a market analysis firm.

The firm said much uncertainty remained this year, both for the prospects for an American carbon trading mechanism, as well as for an international mechanism, especially after the failure of the Copenhagen summit meeting to reach mandatory carbon reduction goals…

As a result of the uncertainty over carbon policy, the total volume of carbon traded this year is expected to increase by only 5 percent compared with last year, to a total of 8.4 billion metric tons – or gigatons — of carbon dioxide equivalent, according to the firm’s annual forecasts.

Still, the biggest growth is carbon trade this year is expected to come from the United States Regional Greenhouse Gas Initiative, a cap-and-trade system for the power sector covering 10 Northeastern and Mid-Atlantic states. These states, which include New York, Maryland and Massachusetts, aim to reduce their carbon dioxide emissions from the power sector 10 percent by 2018.

Leave a Reply

Proudly powered by WordPress | Theme: Baskerville 2 by Anders Noren.

Up ↑