DURBAN DISPATCHES: Carbon collapse
The most dramatic developments in international climate change policy seem to be happening away from Durban, particularly those that have a direct impact on Australia. Deutsche Bank overnight issued a particularly downbeat assessment of the European carbon market, effectively saying it was doomed unless the EU struck a political agreement to lift its emissions reduction target to 30 per cent by 2020 (from 1990 levels) from 20 per cent, or enjoyed a spectacular economic recovery.
Deutsche analyst Mark Lewis said revised economic forecasts for the EU meant that his prediction of a deficit 395 million tonnes of CO2-e out to 2020 was now revised to a surplus of 566 million. Effectively there would be no need for any additional abatement over the next phase of the EU scheme, meaning that the modeling of carbon prices based on the marginal cost of fuel switching was now redundant, and it would now be driven only by political decisions.
Lewis has downgraded his 2011 year end EU carbon price forecast to €6/tonne (previously €9/tonne), and would expect them to trade in a range of €5-7/tonne in the first half of next year. Theya re currently trading at €7.8/t. But he warned that distress in the inter-bank lending market (a la GFC in 2009) could cause prices to break below €5/tonne. A rebound for modest growth in the EU, and a tightening of supply of phase 3 credits, could push carbon prices back up to €10/tonne by the end of 2012. That could put the price back on target towards €20-25/tonne by 2020, but unless there is a “credible political narrative” developing over the next 6-12 months, Deutsche says EU carbon prices could remain below €10/tonne into 2013 and beyond.
Talk about talk
You’d figure that with a year to prepare for these meetings, they might have already agreed on procedure. But, no. As is typical of these events, as Norton Rose highlights in its daily blog, the delegates have been “working under draft rules of procedure, and it was agreed that consultations would continue on this issue, with PNG noting its usual objection and calling for majority voting. Equally, it was not possible to formally agree the COP agenda, which itself has become contentious as a result of submissions by India in respect of accelerated access to critical mitigation and adaptation technologies and related intellectual property rights; equitable access to sustainable development; and unilateral trade measures.” Etc etc.
Meanwhile...
While the climate talks have gone cold, the WMO has released new data confirming that 13 of the last 15 years have been the hottest on record, and predicting that this will amplify the impacts of floods, droughts and other extreme weather patterns. Meanwhile, in Australia, a new report from the Climate Commission points to the damaging effect on health from the impacts of climate change.
Another coup for Qatar
First the World Cup, now the Conference of the Parties. The UN has agreed that the oil-rich state of Qatar will hold the next annual climate change talks in 2012 – the last before the official expiry of the Kyoto Protocol. Losing bidder South Korea will host ministerial talks leading up to the event.
Another fossil
As we predicted in our preview on Monday, Canada seems destined to scoop the pool at the fossil of the day awards allocated by NGO’s within the Climate Action Network. Canada won first prize again on Tuesday, for saying the world needed to take “urgent action” on reducing emissions, despite being the only major country to completely miss its Kyoto targets. The US won second prize for saying “there are an infinite number of pathways to staying below 2 degrees” and managing to avoid all of them.
Comments on this article
Australia's leadership on this issue...
Surely Australia's legislated carbon price is a shining beacon to the world and they will now all follow our lead? If we can do it, anyone can!
What terrible luck for the government that the Labor party national conference is scheduled for the same period as Durban. If only this unfortunate scheduling clash had been avoidable, Julia, Kevin, Greg and the rest of the gang could have headed over there to lead the way. After a couple of speeches from the Australian delegation I'm sure that CERs would be trading at 20 euros and the US and BRIC countries would have signed up to binding targets and an international trading scheme.
Oh well, it looks like it will all have to wait until Qatar...
$23 A Tonne .. Just as smart as
MySchool Website, BER "a school hall for every public school child but computer labs, science wings, digital labs etc for every private school student", Pink Batt based carbon emission reductions, hard wired NBN to every house when the world is heading to LTE, etc.
Dumb, dumber and dumbest .. might be an appropriate motto.
The value judgements are interesting .. is Canada the "worst on the planet" for accepting reality? Or do they stand out as stepping away from the dung piles being built in Durban?
Response...
The examples of Hill Hoist, Victa and you forgot the Xerox process, recently Cohlear and CSL tells you just how few and long ago.
Getting on with the job means someone goes out of business first. Pioneers get the arrows. Sounds great to say get on with it, but if you are priced out of the market for as little as a year you are ancient history. The shovel sellers and prostitutes were the ones who made the money, not the first movers. First mover advantage is great if you pull it off, but guessing 99% of first movers were no more successful than the early miners.
Good to see some agreement that all the fairy castle dreams of renewables in every home roof top and rivers of employment for all aren't swallowed by everyone.
Carbon Competitive
Peter,
By it's own admission, the governement acknowledges that half the CO2 reduction in Australia will happen via the purchase of offshore credits - net result, not much change in CO2 levels downunder. The renewable only pipedream will never happen, however, don't forget how innovative Australia is - after all she produced the Hills Hoist and the Victa lawn mower :-)
being AWAKE
Being awake Peter i think that it is exactly the point that you make about mining that makes Australia's action so important.
We are to some extent reliant on mining profits and so by transforming our industries to be carbon competitive ahead of the game, surely we have an opportunity to build industries that are more efficient and have higher productivity than our competitors.
Won't this contribute to our 'niche' and also prove the arguments of other larger yet similar countries to be baseless. The change has to happen regardless, so why not get on with the job?
Who invited Canada .. or..
Who invited Canada? Or...
European countries: "look at my wonderful shiny harlequin clothes - I am superb"
Australia: "Gimme gimme gimme..I want too"
Canada: "what clothes".
US: "More ways of stuffing an economy than stuffing it with renewables"
India: "tell me how I can make these shiny new clothes - NOW!"
Russia: "what the..."
China: "we shall see...."
PNG: "Tok pisin. Lukim PNG- in viles olgeta vot"
..back in the real world, $23/tonne is looking more ludicrous every day. It may even be tolerable, but insisting on a renewable only economy is economic suicide for a country with no manufacturing base, very little innovation to successful market history linked to a banking system that thinks solely in bricks and mortar. Time to wake up and realise Australia is a niche player in all things other than mining.
Aint gonna happen.