As if things couldn’t get much worse, the banking crisis is also exacerbating global warming.
The below chart, from the European Climate Exchange (via Hellasious at Sudden Debt), shows how.
It’s the price of EU-traded futures on carbon dioxide emissions. And as can be seen, since September, like just about every other market, prices have collapsed.
While in the short term this is a good thing – lower futures prices imply fewer permits in demand which implies in turn that fewer companies are producing C02 over their emission caps – in the long term, it’s a setback: With contracts so cheap, companies are disincentivised to reform their businesses. An emission cap-based system thus becomes relatively redundant as a tool for incentivising reform through a market mechanism.
Hellasious notes:
This regime, therefore, does not drive continuous greening but does so only on a marginal basis: pressure to change varies with economic activity, since most activity is still “black” [coal, petroleum, gas etc.].
Related links:
About the European Climate Exchange