The price of climate quotas is record low. It is cheaper to pollute than for a long time.
(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
Crisis. A climate quota, a so-called CER that gives the right to emit 1 tonnes of CO2, was traded for record low 7,4 euros, 58 Norwegian kroner, last week.
The reason for the fall in prices is the economic crisis in Europe. The produced less and less polluted, and the result is a surplus of climate quotas in the market.
This can have undesirable consequences at a time when new measures to reduce CO2emissions are one of the largest the challenges facing the world's industrialized countries.
- The effect of persistently low prices is that the incentive for companies subject to quotas to implement emission reduction measures is weakened. This explains senior engineer George Nicholas Nelson in Department of climate and industry in the Climate and Pollution Directorate (Klif), to Ny Tid.
Collapsed market?
"But then we have to have low prices over a long time," he emphasizes. The best thing, in isolation, was that the price of carbon stays as high as possible, so that the incentive to reduce own emissions increases. Simultaneous must we expect it to fluctuate, and companies will constantly weigh what is cheapest, Nelson says.
The CER market had sales of NOK 101 billion last year, compared to 145 billion in the 2008 peak year, and analysts tell Reuters that the carbon market is in danger of collapsing if the downturn in Europe lengthy. Cliff follows the fluctuations in the market, but Nelson still won't go that far.
The quota system of the EU and its rules are set and enshrined in directives valid until 2020. Klif does not regulate the market, but enforces the regulations that the companies subject to quotas must comply with.
These are rules related to the registration and reporting of emissions, he explains.
Quota deficit
In Norway, the state issues 15 million climate quotas a year. Expected emissions from the companies subject to quotas in, among other things, offshore operations and the wood processing industry in Norway are at 19,5 million tonnes CO2 annual.
It gives one deficits of 4,5 millions of greenhouse gas emissions allowances, which companies must cover by reducing their own emissions or purchasing climate allowances from others who have reduced their emissions. Norway is also a member of the EU quota market, and Norwegian companies can buy climate quotas in EU countries.
Klif also has a voluntary quota purchase scheme where anyone can buy quotas, and since 2. October 2008, 23.974 quotas were sold through the scheme.
These are removed from the system and deleted, and the allowance for allowances expires, so that the total quantity of allowances in circulation is reduced. The price Klif offers will reflect the quota price in the market, but these quotas cannot be resold, and therefore it is not possible to use Klif-quotas to speculate and sell as the price rises.
George Nicholas Nelson, however, does not disregard that the record low prices for climate quotas can have greater consequences for voluntary quota purchases in the international carbon market. thus, the road should be open for those who still have money left over after the holidays.
(This is an excerpt from Ny Tid's weekly magazine 26.08.2011. Read the whole thing by buying Ny Tid in newspaper retailers all over the country, or by subscribing to New Tid - click here. Subscribers receive previous editions free of charge as PDF.)
