Carbon price – EU: $8 (and falling), Australia: $23 (and rising)


The EU carbon price has slumped to a new low, making Australia’s $23 a tonne carbon tax in mid-2012 nearly three times the price on the European market:

European Union and U.N.-backed carbon prices plunged to new record lows on Wednesday, beset by worries about Europe’s economic turmoil and uncertainty about a future global climate pact.

Carbon prices have shed more than 60 percent since June, as Europe’s worsening debt crisis dented demand at a time when the EU emissions trading scheme, the world’s biggest carbon market, is oversupplied with hundreds of millions of permits.

Benchmark EU carbon permits tumbled more than 8 percent on Wednesday to a fresh record low of 6.43 euros ($8.41)a tonne. They were at 6.51 euros at 1305 GMT.

Front-year U.N.-issued carbon credits, so-called certified emission reductions, fell 11 percent to a new record low of 3.92 euros a tonne. (source)

And this won’t be the end. Carbon prices will end up like the Chicago exchange, worth a few cents, whilst Australia commits economic suicide from next July with a price of $23.

EU carbon price tumbles to new low


The only way is down…

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.

FREEFALL

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.

G20 to Australia: "You're on your own" on carbon


"Congratulations, Julia, on wrecking your economy"

“Courageous” is how the G20 describes Australia’s action on climate change! What a wonderful euphemism for bat-sh*t crazy. Yet Gillard and Combet will no doubt still argue that Australia is being “left behind” and that it’s all in the “national interest” – delusional!

As Europe sinks into economic oblivion, the US debt creeps up by the day, and a GFC Mk II looks ever more likely, the rest of the world is starting to realise that there are more important things than pointless environmental gestures which will be hugely damaging for standards of living but which will do nothing for the climate.

JULIA Gillard’s introduction of a carbon tax has been praised at the latest economic summit for showing the way on climate change but Australia is being isolated within the G20 on carbon pricing as members retreat due to changing priorities and economic pressure.

As the government prepares to cut the carbon tax debate in the Senate to pass the bills with Greens’ support, the final communique from the G20 summit in France recognises Australia’s leading role on climate change.

But with the increased economic pressures from the global debt crisis and a shift in priority to food security, particularly in Africa, climate change action is dropping down the order of importance.

Critics of the G20’s lack of action on climate change have praised Australia’s action as “courageous” and said the diminishing priority for climate change was a “big problem for the G20”.

The shift at the G20 and the praise for Australia expected in the communique highlights the Gillard government’s move ahead of the developed economies on carbon pricing.

While Australia is pursuing the most comprehensive carbon tax in the world to combat the effects of climate change, other G20 members are retreating from emissions trading schemes to cut greenhouse gas emissions, such as Canada, while others are giving greater emphasis to dealing with the immediate effects of climate change. [In other words, adaptation – Ed.]

Australia (and Gillard) are turning into standing jokes on the world stage. How embarrassing.

Read it here.

Australia goes it alone… as EU back-pedals


Reality bites

The timing couldn’t be better (or should I say worse). Just as plucky little Australia, with 1.5% of global emissions, decides to unilaterally “save the planet” by possibly reducing global temperatures by a few thousandths of a degree Celsius, other, more sensible countries are realising that without a global agreement, punishing emissions reduction targets are pointless – and dangerous.

Just a few days ago, UK Chancellor George Osborne said “we are not going to save the planet by putting our country out of business”, yet that is exactly what Australia has decided to do! Well done, Julia and Greg!

And even the EU’s moonbattish Connie Hedegaard (pictured) is sounding decidedly dejected, as reality finally dawns:

European Union environment ministers — responsible for only 11 percent of global carbon emissions [still nearly ten times more than Australia – Ed] — said they would commit to a new phase of the Kyoto climate change pact, on the condition that nations blamed for the rest join up too.

The environment council conclusions, agreed in Luxembourg on Monday, outline the bloc’s negotiating position ahead of the next global climate conference in Durban, South Africa, which starts at the end of November. [Well I can tell you that there is not a snowball’s chance of China and India signing up to such a restriction on their economic growth – Ed]

“What’s the point of keeping something alive if you’re alone there? There must be more from the 89 percent,” EU Environment Commissioner Connie Hedegaard told Reuters. (source)

There won’t be an agreement in Durban, and there is little possibility of a global agreement in the foreseeable future. Surely these thoughts must occur even to boneheaded politicians like Julia and Greg? Of course they do – privately, when they are alone – but then they suddenly remember, with a cold sweat, that they are being blackmailed by the Greens to take this pointless climate action, and as we have discussed before, desperately clinging to power is more important to Labor that doing what is right for Australia. Otherwise, they would have called another election to let the people decide.

The only consolation is that the longer Labor shows such contempt for the Australian people, the more savagely they will be punished at the next election – and that thought keeps me going.

Opinion polls: how to get the answer you want


The Sydney Morning Herald is in a state of high excitement today, as a new poll gives it a “two fingers up to deniers” moment (admittedly copied almost verbatim from the UK equivalent, The Guardian here):

EUROPEANS believe the dangers of climate change represent a more serious problem than the current financial turmoil, according to a major new poll.

The Eurobarometer poll found most people in the European Union consider global warming to be one of the world’s most serious problems, with one-fifth saying it is the single most serious problem.

Overall, respondents said climate change was the second most serious issue facing the world, after poverty.

Connie Hedegaard, European climate commissioner, said: ”This is encouraging news. The survey shows that the citizens of Europe can see that economic challenges are not the only ones we face. A clear majority of Europeans expect their politicians and business leaders to address the serious climate challenge now.” (source)

So as always, we check the questions, and here is the relevant extract from the lengthy PDF:

Loaded much?

So not only is the question headed “Climate Change”, but the first option on each answer is, that’s right, “Climate change”. And I am pretty sure that those asking the questions would have prefaced each interview with a spiel about how this was a poll about attitudes in Europe towards climate change as well, so the purpose of the questions would have been well and truly embedded in the respondents’ minds before the questions were even asked. And hey, we all want to give the “right” answer don’t we? But we must give them credit for the fact that even after all that badgering, they still put “Poverty, hunger and lack of drinking water” above climate change.

Furthermore, this is an opinion poll conducted on behalf of the climate change apparatchiks in Europe, as the disclosure statement reveals:

“This survey has been requested by the Directorate-General Climate action…

And the Introduction further reveals the inherent bias in the entire process:

Climate change is one of the greatest challenges of the modern age. The European Commission established its Directorate-General for Climate Action in February 2010 to strengthen Europe’s response to this issue (previously climate change was under the overall remit of DG Environment). 

So the weight we can place on these results is very suspect. But as usual, neither the SMH nor The Guardian asks any of these questions, and regurgitate the line without any critical thought, because it fits their pro-climate action agenda.

Ben Pile at Climate Resistance has more:

So here’s how it works… You take people by surprise. You ask them to chose from a narrow range of issues. And then you ask them again. And Again. And again. You don’t give them the benefit of making a decision in the context of a debate. And you don’t canvass them for their opinion about costs and benefits, either ‘globally’ or in relation to themselves. You don’t tell them that the results will be used to legitimise certain policies. You compare their opinions to a historic low, and say that the answers demonstrate growing support for your policies — the bases of which have never been tested for popular assent at the ballot box.

And EU Referendum here.

EU carbon market crashes


Shambolic

The shambles that is the EU is held up as a shining example of what Australia should aspire to be – fractured, miserable, uncertain, and verging on bankruptcy. Terrific. And to cap it all the carbon price has now crashed to 12 Euros, or AU$16, far less than the Three Gs (Garnaut, Government and Greens) want ours to start at. Hopefully it will continue on down until it reaches the level of the Chicago Climate Exchange, where trading finally ceased at a few sad, sorry cents per tonne. Right before it was closed for good.

PRICES in the European Union’s emissions trading scheme have plunged to two-year lows, intensifying pressure on the Gillard government to start with a low carbon tax and threatening to complicate negotiations with the Greens, who are pushing for a strong start to the Australian scheme.

Business groups yesterday seized on reports that the EU permit price fell 11 per cent on Friday — and 22 per cent in a week, testing a two-year low of $16.79 a tonne — saying it highlighted the dangers of a fixed-price scheme that could leave Australian businesses facing higher prices than international competitors.

The EU price has traded well below the $20-$30 starting rate recommended for the Australian scheme by government climate change adviser Ross Garnaut.

European analysts said the reasons for the fall included the bleak economic outlook sparked by the Greek debt crisis, lack of confidence in the will of European governments to achieve their stated policy aims, and the fact energy-efficiency measures appeared to be replacing carbon pricing as the EU’s main climate change lever.

So Australia will plough into carbon pricing just as others, who have experimented with it and seen it fail, are looking elsewhere. Brilliant again, Julia, Greg, Ross etc etc.

Read it here.

Denmark's ETS scam


Licence to scam

Any ETS is ripe for fraud and corruption. In December 2009, ACM reported that fraudsters had pocketed an eye-popping €5bn from the European ETS, so it’s little surprise when stories like this come to light. Connie Hedegaard, European Commissioner for “Climate Action”, wrote in The Australian on Monday that the Cancun “deal” put climate action “back on track”. Apart from the usual warmists’ trick of blaming individual weather events, such as the Moscow fires and Pakistani floods, on climate change when it suits them (despite huge swathes of the planet currently experiencing extreme cold), the article claims that the deal would restore public faith in the UN climate process. Stop laughing. And today, it is revealed that the Danish ETS, the inception of which was presided over by Hedegaard herself as climate and energy minister, was so lax in its background checks that rogue traders scammed 2% of Denmark’s entire GDP in lost taxes:

The Denmark CO2 permit registry was set up with extremely lax rules and regulations, possibly intentionally. In 2007, Hedegaard removed the requirement for identification and in a very short period of time traders figured out the loopholes and started to back up the proverbial truck. How? To put it simply: you could round robin CO2 credits, booking the VAT as a bonus each time.

What is painfully obvious is that more than 1100 of the 1256 (about 88 per cent) of the registered traders listed in their system were illegally set up for fraudulent activity. The traders have since been delisted as the scope of the crime becomes obvious.

The fake but registered traders used made up, unique addresses for their business: in one famous case, a trader was listed as trading out of a parking lot in London. In another, the trader took the name of a dead Pakistani national.

The fraud centred on the use of VAT [value added tax, European equivalent of GST – Ed] as a mechanism to generate real non-taxed cash flow. An international trader would buy VAT free credits from one nation, and then resell them to a VAT added customer in a second nation, pocketing as much as 25 per cent of the cost of the trade as a personal commission. The trader then kept the VAT difference in lieu sending in the VAT to the necessary tax system, effectively arbitraging the VAT system (See, e.g., Cap and Trade; Leaving Las Vegas, “The Hole You’re In”). This trade was coined a “carousel” as the traders would re-export the credits, claiming the VAT only to re-import the credits and reselling them again with a new VAT assigned. They could wash, rinse and repeat booking up to a 25 per cent VAT in the process each time. (source)

But this is par for the course in climate action – emissions trading schemes, solar rebates, wind farm subsidies, you name it. The politicians simply turn a blind eye when the ends justify the means, since “saving the planet” trumps any trifling concerns about fraud. Just more of the same green waste with which we have become so familiar, and with which we will become even more acquainted if a carbon trading scheme is ever established here.

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