Wednesday, June 01, 2011
The agenda revealed
And if you believe that one, the latest Reuters report will come as a bit of a shock. It tells us that the EU's carbon credit market could be flooded with excess permits over the next decade, cutting prices in half and depriving governments of billions in budgeted revenues.
Apparently, this terrible outcome will arise from the new "energy services directive", due in late June, which will force owners of buildings, vehicles and more controversially, industry, to cut energy consumption through efficiency measures.
One might have thought that such a move would be applauded for its planet-saving potential, but not a bit of it. More efficiency and thus less energy usage means less CO2 which means less permits needed ... leading to a surplus.
"There's a real concern of negative impacts on prices if the issue is not properly addressed," says one EU source. "Some of the studies imply that carbon prices will collapse".
One study suggests carbon credit prices might fall to €14 per tonne, compared to a business-as-usual price of €25. Another sees the price dropping to zero. "The energy services directive could potentially wipe out billions of euros for governments across the EU, unless EU ETS allowances are set aside," says Sanjeev Kumar at environment consultancy E3G.
So it is that there are strong rumour that the governments of EU member states will block the energy-reduction measures, to avoid severe dents in their budgeted revenues for 2013-2020. Saving the planet is all very well, but cash in the bank is far more important.