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Trading Carbon : December - January 2011
27 CARBON EMISSIONS TRADING The Carbon Market & Investors Association changed its name to the Climate Market & Investors Association in October. The move reflected a lack of progress on the policy front for carbon trading around the world. Carbon prices in the largest market -- the EU Emissions Trading Scheme -- have slipped below ¤10 ($13.5) a tonne of carbon dioxide (tCO2) and analysts are regularly revising future price projections downwards. These are price levels that do little currently to incentivise low- carbon investment. Does such news mean we are witnessing the slow demise of carbon cap-and-trade? There are many people and industries that would surely be happy with such a scenario. Yet, beneath the supposed gloom, there is much encouragement for carbon trading. On November 8, for example, the Senate in Australia passed legislation that introduces a carbon price in the country from July 2012 and emissions trading from 2015. And, in late October, California all but finalised the r ules for its carbon cap-and- trade system, which will start in January 2013. In Europe, there are no plans to end the EU ETS. Prices may be slipping lower, reflecting the declining economic conditions and over-supply of allowances and carbon credits. The phase three (2013--2020) cap is set and, thereafter, will tighten by 1.74 percent each year. The EU is committed to addressing climate change and, apart from the ETS, has "no other tool at hand" for that task, said Emmanuel Fages, European power, coal and carbon analyst at Societe Generale in Paris. In the current financial turmoil, would a high carbon SeeALittleLight THERE MAY NOT BE A GLOBAL CARBON MARKET, BUT DOMESTIC AND REGIONAL SCHEMES MEAN THERE IS STILL PLENTY OF ACTIVITY AROUND THE WORLD. ROBIN LANCASTER REPORTS REUTERS/FINBARR O'REILLY Dec 2011/Jan 2012