Big news for the European Union Allowances market.
From the FT’s Pilita Clark and Joshua Chaffin:
The European Parliament has voted against propping up the EU’s emissions trading scheme in a move that sent prices plunging to new lows in the world’s biggest carbon market.
Okay. This is weird.
Looks like the analysts in Citi’s commodities team headed by Seth Kleinman (which includes the inimitable Ed Morse) didn’t get the memo. You know, the one about needing to talk up the carbon complex as much as possible?
After all, how else do you account for the disruptive tone of the following summary points? Read more
The European parliament’s environment committee voted in favour of a plan to allow “backloading” of carbon permits. It’s the somewhat significant vote that follows the less significant vote by another committee in January, which helped prompt a big crash in carbon markets at the time.
It’s curious that in this little corner of EU co-ordination, a little good news doesn’t even provide a brief rally; prices fell more than 20 per cent after news of the vote. Read more
Continuing the theme of farcical carbon markets:
Friday saw market uncertainty following the EU’s mistaken release of a press release suggesting that member states had voted in favour of a ban from the 1 st of January despite the vote not having taken place.
Cyberthieves have stolen as much as €30m in carbon allowances from the European Union’s emissions trading system, authorities said, as exchanges across Europe halted trading on Thursday, the FT reports. Exchanges including ICE Futures Europe, Nasdaq OMX Commodities Europe and London-based LCH.Clearnet stopped trading of emissions contracts, which are central to the bloc’s fight against global warming. “There is no point in denying that this is a pretty big deal,” said Henry Derwent, head of the International Emissions Trading Association in Brussels. The exchanges were reacting to an order by the European Commission, the EU’s executive arm, which on Wednesday ordered spot trading in emissions allowances to be suspended for at least a week due to security breaches.
US efforts to pass legislation limiting greenhouse gas emissions may be abandoned by Senate legislators, the WSJ reports. Senate majority leader Harry Reid said he had failed to persuad 60 senators to support even limited proposals restricting emissions from electric-power companies.
Details of a new “green investment bank”, replacing several government quangos and with powers to raise billions from green Individual Saving Accounts and other financial instruments, will be unveiled on Tuesday, the FT reports. Putting the UK’s economy on a low-carbon footing will cost about £550bn by 2020, according to a commission set up to examine how a green investment bank could work.
From John Parsons, a senior lecturer at the MIT Sloan School of Management who is presenting at the CFA Institute 2010 Annual Conference, which begins on Sunday in Boston…
Earlier this year, the US Securities and Exchange Commission issued guidance on disclosure requirements pertaining to climate change and greenhouse gas emissions. Although a comprehensive system for regulating greenhouse gases has not yet passed the Congress, the SEC advised companies to “evaluate the potential impact of pending legislation and regulation related to this topic.” “A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.” Read more
There was a chap in the audience of this year’s London City debate — claiming to be a vulcanologist — who questioned the whole point of carbon trading schemes given that any savings would be blown out of the window by just one or two major volcanic eruptions in the world.
Which got us at FT Alphaville thinking about the significance of Iceland’s latest volcanic eruption on European carbon markets. Read more
The annual Lord Mayor’s City Debate took place in London’s Mansion House on Monday evening, with FT Alphaville in attendance. (Many thanks to the Chicago Mercantile Exchange for the invitation.)
The motion put forward to financiers: financial markets are doing nothing to help stop climate change. Read more
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. Read more
The market for emission permits is beginning to feel the repercussions of a global recession, according to market-watchers IDEACarbon. Contracts in the EU program – the world’s largest – closed at an 18-month low on Friday.
Now in its second phase, the programme depends on emitters buying permits (EU Allowances or EUAs) when they exceed their government-appointed emissions quotas. Those that emit less, meanwhile, can sell surpluses back into the market for a profit. Read more