Tag Archives: carbon-markets
Business Says End Carbon Tax, Bring In ETS
By Nick Perry From:AAP April 18, 2013 A GROWING chorus of business and industry groups is calling for Australia’s carbon tax to be scrapped now and replaced with an emissions trading scheme (ETS) and a floating price. Opposition to the fixed-price regime – currently $23 per tonne of CO2 emissions – has grown since a failed bid to improve Europe’s ETS saw market-based prices there plummet to below $4 per tonne. Market analysis released on Thursday forecasts Australia’s carbon price could plunge to $2.70 when Labor’s carbon pricing mechanism links with Europe’s ETS in July 2015. The fixed price is due to rise to $24.15 in July this year and $25.40 in 2014, before the price is set by the market in 2015. Industry is calling for an earlier transition to a floating price, arguing it would help drive down power costs for businesses and households. Wesfarmers chief Richard Goyder said companies didn’t want to pay significantly more for emissions than the rest of the world. “I think business would welcome a more market-based price, considering the cost pressures we’ve got at the moment,” he said on Thursday. The Australian Industry Group said by abolishing the fixed-price period and linking with Europe, Australia’s emissions targets would still be met but at a lower cost to business. “We should make the most of the opportunity to meet our own targets at least cost,” said AiGroup chief executive Innes Willox. In its latest forecast, energy and carbon advisory firm RepuTex predicted Australia’s carbon price would average just $2.70 when it’s floated until 2020. Treasury anticipated a carbon price of $29 in 2015/16, but since Europe’s price spiral Labor has confirmed the forecast would be revised in the May budget and an updated revenue outlook provided. RepuTex executive director Hugh Grossman said the price plunge would see companies meet their emissions targets at a much lower cost and spur a revival in coal-fired power generation. The total impact would be an immediate reduction in wholesale electricity prices. “They’ll basically drop to levels pretty close to what we would have seen before the introduction of the carbon pricing mechanism,” Mr Grossman told AAP. Meanwhile, opposition climate action spokesman Greg Hunt says the coalition agrees using markets was the best way to tackle global warming – but not with a carbon tax. Using a “classic market mechanism”, Mr Hunt said the coalition would directly fund activities that reduced CO2 emissions – known as abatement – like revegetation and improving soil carbon. Abatement would then be purchased at the lowest possible cost via a reverse auction, a process where prices are driven down by competing sellers. In a speech to the Australian National University on Thursday evening, Mr Hunt will argue this carbon buyback approach would reward innovation and initiative while meeting Australia’s climate targets. “Whereas the carbon tax tries to drive up the price of basic services in order to force down use … we will not provide a dollar unless there is an actual reduction of emissions,” he will say. “Our Direct Action Plan is a simple, low-touch market mechanism.” Continue reading
Govt To Review Carbon Tax Modelling After EU CO2 Price Cras
AAP 17/04/13 The federal government is expected to review modelling for its carbon tax in the lead-up to the budget, after a vote in the European Union sent the price of CO2 emissions tumbling. A proposal by the European Commission to reform the EU emissions trading scheme (ETS) to have polluters pay more was voted down by EU lawmakers overnight. The controversial plan aimed at freezing – or “backloading” – 900 million carbon permits between now and 2015, to address oversupply and drive up their value. Analysts expected the plan would double the price per tonne of CO2, but the price plunged after the vote was defeated narrowly by 19 votes, with 63 abstentions. As news of the rejection spread, European carbon prices slumped to €2.63 before recovering some lost ground to trade just below €3 ($A3.84). The decision has implications for Australia’s carbon price mechanism, which will link with Europe’s ETS from July 2015. Australia’s carbon price is currently a fixed $23 per tonne and will rise incrementally over the next two years before linking with the European scheme. Treasurer Wayne Swan said the government would re-examine its carbon price before the May budget. “We’ll look at all of our assumptions and forecasts in the budget, and we’ll do that in the normal way,” he told reporters. Climate Change Minister Greg Combet said Treasury would model the carbon price in “the usual way” in coming weeks and provide revised forecasts for 2015/16 and a revised revenue forecast. Treasury modelling had projected the price at $29 per tonne in 2015/16. Mr Combet said the government would continue with its plans to link with the European emissions trading scheme from 2015, when Australia would have a common carbon price with 31 other countries. “Obviously, the price in the European market has an influence on the Australian price at that time, but that is two years away and a lot of things can happen between now and then,” he told AAP. The EU decision was another example of the global financial crisis having an impact on the Australian budget, he said. Continue reading
If Carbon Markets Can’t Work in Europe, Can They Work Anywhere?
By Bryan Walsh April 17, 2013 But the ETS—and carbon trading more generally—is not doing well, and its problems are taking some of the green shine off of Europe. Since its launch the ETS has struggled, with the price of carbon falling as the 2008 recession and overly generous carbon allowances undercut the market. In the ETS business are given free allowances to emit carbon—too many free allowances mean they don’t need to reduce their carbon emissions much, which erodes the demand for additional carbon allowances on the market and causes the price to drop. Prices fell from 25 euros a ton in 2008 to just 5 euros a ton in February. There was a way to fix this—take 900 million tons of carbon allowances off the market now and reintroduce them in five years time, when policymakers hoped the economy would be stronger and demand would be greater. As anyone who’s taken Econ 101 would know, artificially reducing the supply of carbon allowances in such a drastic way—something called “backloading”— should force the price back up.America may be a bit of a mess when it comes to climate policy—though that mess has been surprisingly effective in reducing carbon emissions in recent years—but environmentalists could always look across the Atlantic Ocean to Europe , where greens are green, cars are small and global warming actually matters. Countries like Germany and Spain have led the way in supporting renewable energy, and cities like Amsterdam and Copenhagen put America to shame when it comes to encouraging dense development and carbon-free cycling. But the green jewel was the Emissions Trading Scheme (ETS)—the European-wide carbon market, by far the largest such system in the world. The ETS, launched in 2005, allowed Europe to put a common price on a ton of carbon, which was meant to encourage utilities and factories to reduce carbon emissions in the most efficient way popular. A similar system carbon cap-and-trade system for the U.S. died in the Senate in 2010, and there’s little chance it will be revived any time soon. ( MORE: As the World Keeps Getting Warmer, California Begins to Cap Carbon ) But on April 16, the European Parliament surprised observers by voting down the backloading plan. In turn, the European carbon market collapsed, with the price of a carbon allowance falling by more than 40% over the day. “We have reached the stage where the EU ETS has ceased to be an effective environmental policy,” Anthony Hobley, the head of climate change practice at the London law firm Norton Rose, told the New York Times. The ETS is a mess. Backloading failed because even in very green Europe, economic concerns seemed to trump environmental ones. European Parliamentary members worried that any action that would cause the price of carbon to rise would add to European industry’s already high energy costs. Europe, unlike the U.S., doesn’t have relatively cheap, relatively clean natural gas to help cushion that blow. At the same time, European nations like Germany are rethinking some of their renewable energy policies, concerned by the rising cost of electricity. It looks like a textbook example of what Roger Pielke Jr. calls the “ iron law of climate policy “: when climate policy starts to hurt economically, even the greenest states start to back away. It’s possible that backloading may get a second chance before the European Parliament, and even without a viable carbon market, Europe is still the global leader in climate action. Nor is the ETS the only game in town. California launched its own cap-and-trade system this year—though that’s come under political pressure as well—and Australia has introduced a price on carbon. China may do so as well. But the hope that we may be able to reduce carbon emissions the same way we cut pollutants like sulfur dioxide and nitrous oxide—through a well-run cap-and-trade —seems to be dimming, a victim of its own complexity and a sluggish global economy. That might leave the door open for other policies, including a straight carbon tax, more support for renewables or increases R&D funding for carbon-free power. We could use all three, but carbon markets may be finished. If carbon trading can’t make it in Europe, it can’t make it anywhere. Read more: http://science.time…./#ixzz2QjSZABlC Continue reading
