European Union emission permits slumped to a 30-month low last week as the economic troubles of the region cast their shadow on the carbon market.
Carbon permits for delivery in December fell to €9.82 per metric tonne on October 4 – the lowest price since February 2009 – and less than half the floor price the UK has suggested to ensure necessary investment in low-carbon energy generation.
The slide was the result of dwindling demand for carbon allowances, juxtaposed with additional supply as Greece and the UK sold permits. EUA prices subsequently perked up on October 6, with the European Court of Justice ruling that the inclusion of international aviation in the EU's emission trading system is compatible with international law.
This means that airlines landing or taking off from EU ETS countries will have to participate in the scheme, thereby creating demand for the EU allowances. These were trading between €10.60 and €10.70 on London's ICE Futures Europe exchange on Tuesday this week. Bloomberg New Energy Finance analysts say that they may rise above €11 in coming days.
Emissions also came under the spotlight at climate talks in Panama last week – the last summit before the UN climate change conference in Durban, starting late next month. In South Africa, the 200-odd nations will debate whether to extend the 1997 Kyoto Protocol, which lapses at the end of 2012, replace it with a new treaty, or if not, what to do if there is a gap between agreements. Talks are at an impasse for several reasons, including the lack of consensus over which nations should take on binding targets to reduce emissions.
The Kyoto agreement, which was never ratified by the US, distinguished between developed and developing countries, and imposed emission limits only on the former. Some industrialised nations are now demanding binding emission targets for large emerging economies like China, Brazil and India. "We could only consider an agreement that applies with equal legal force to all the major economies," Jonathan Pershing, the US deputy special envoy said at the close of the talks in Panama.
Japan, Russia and Canada say they will not take part in a second phase of Kyoto unless the accord is extended to China – which has emerged as the world's biggest emitter of greenhouse gases – and the US. Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC) said on Monday that climate negotiators may seek to extend the Kyoto Protocol excluding these three countries.
India has meanwhile said that global climate talks must ban the use of unilateral trade measures by developed countries. Tariffs must not be imposed in the name of climate change, a statement from the environment ministry said. It has requested a discussion on the issue in the talks in South Africa starting in November.
In contrast, countries like Australia and South Korea are voluntarily considering emission curbs and the establishment of local carbon markets. Korea's Posco, Hyundai Steel and Samsung Electronics are among the 366 companies that would cut about 8.3 million tonnes of emissions next year. The Australian parliament is due to read the proposed carbon price legislation for a third time on Wednesday, after which the bill should go to the Senate for further deliberation.
Emissions from EU ETS countries rose 3.8 per cent in 2010 as a colder winter and slightly higher economic growth spurred demand for energy, said the European Commission.
European Union emission permits slumped to a 30-month low last week as the economic troubles of the region cast their shadow on the carbon market.
Carbon permits for delivery in December fell to €9.82 per metric tonne on October 4 – the lowest price since February 2009 – and less than half the floor price the UK has suggested to ensure necessary investment in low-carbon energy generation.
The slide was the result of dwindling demand for carbon allowances, juxtaposed with additional supply as Greece and the UK sold permits. EUA prices subsequently perked up on October 6, with the European Court of Justice ruling that the inclusion of international aviation in the EU's emission trading system is compatible with international law.
This means that airlines landing or taking off from EU ETS countries will have to participate in the scheme, thereby creating demand for the EU allowances. These were trading between €10.60 and €10.70 on London's ICE Futures Europe exchange on Tuesday this week. Bloomberg New Energy Finance analysts say that they may rise above €11 in coming days.
Emissions also came under the spotlight at climate talks in Panama last week – the last summit before the UN climate change conference in Durban, starting late next month. In South Africa, the 200-odd nations will debate whether to extend the 1997 Kyoto Protocol, which lapses at the end of 2012, replace it with a new treaty, or if not, what to do if there is a gap between agreements. Talks are at an impasse for several reasons, including the lack of consensus over which nations should take on binding targets to reduce emissions.
The Kyoto agreement, which was never ratified by the US, distinguished between developed and developing countries, and imposed emission limits only on the former. Some industrialised nations are now demanding binding emission targets for large emerging economies like China, Brazil and India. "We could only consider an agreement that applies with equal legal force to all the major economies," Jonathan Pershing, the US deputy special envoy said at the close of the talks in Panama.
Japan, Russia and Canada say they will not take part in a second phase of Kyoto unless the accord is extended to China – which has emerged as the world's biggest emitter of greenhouse gases – and the US. Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC) said on Monday that climate negotiators may seek to extend the Kyoto Protocol excluding these three countries.
India has meanwhile said that global climate talks must ban the use of unilateral trade measures by developed countries. Tariffs must not be imposed in the name of climate change, a statement from the environment ministry said. It has requested a discussion on the issue in the talks in South Africa starting in November.
In contrast, countries like Australia and South Korea are voluntarily considering emission curbs and the establishment of local carbon markets. Korea's Posco, Hyundai Steel and Samsung Electronics are among the 366 companies that would cut about 8.3 million tonnes of emissions next year. The Australian parliament is due to read the proposed carbon price legislation for a third time on Wednesday, after which the bill should go to the Senate for further deliberation.
Emissions from EU ETS countries rose 3.8 per cent in 2010 as a colder winter and slightly higher economic growth spurred demand for energy, said the European Commission.