As if the European financial crisis wasn’t bad enough. Not only is GFC Mark II just around the corner, courtesy of a US debt of over $15 trillion, the sound financial management of Greece, Italy, Ireland, Spain, Portugal, etc etc, but also, thanks to Julia Gillard’s pointless carbon tax (AU$23 per tonne, rising each year thereafter), Australia’s competitiveness at a very difficult time will be severely compromised in the global economy, as European carbon prices enter free fall:
European Union carbon permits and U.N.-backed credits collapsed to record lows on Thursday, extending this week’s sharp price slide as fears of a slowing economy sapped demand in the markets that are heavily supplied with emissions units.
It was also a signal that market participants are losing confidence in the flagging EU carbon market, the world’s biggest cap-trade scheme, traders and analysts said.
This latest crash could not have come at a worse time. In just a few days a U.N. climate summit in South Africa will resume work on a new globally binding pact to cut emissions.
Investors are already nervous about the future of carbon markets, given the uncertainty around when a new climate pact will emerge and what trading mechanisms will operate under it.
“Confidence is at an absolute minimum. It’s the macro-economic picture and the whole sentiment is not too good,” said a carbon trader at a financial institution.
Front-year carbon permits called EU Allowances (EUAs) closed 6.6 percent lower at 7.91 euros ($10.54) a tonne, after touching an all-time low of 7.80 euros earlier.
“There’s room to go down to 7 euros,” said Matteo Mazzoni, carbon analyst at Nomisma Energia in Italy, adding that 7.70 euros could be the next support level.
Some 11,000 power generators and industrial plants from 30 European countries take part in the region’s emissions trading scheme. It covers around half of the bloc’s carbon emissions.
Benchmark U.N.-issued carbon credits, which come from accredited emission reduction projects in developing countries, closed down almost 8 percent at 5.43 euros, after hitting a new record low of 5.30 euros.
Carbon prices have shed more than half their value since June, as the euro zone’s worsening debt crisis choked demand for emissions permits.
The EU carbon market is also oversupplied with hundreds of millions of permits, and some analysts don’t expect demand to outpace supply until 2020.
“The oversupply seems to be overwhelming,” the trader said. (source)
Demand won’t outpace supply until 2020 – meaning that if the carbon tax survives that long (highly unlikely), Australians will suffer at least three years of a fixed carbon price far greater than that in the EU, and then a market-based trading scheme which will have a price floor of $15 from day one.
Hello? Julia and Greg? Are you receiving any of this? This Labor government sure know how to screw a country. Their own.