UBS Bank Report: European Carbon Trading Scheme Has Cost 210 Billion Euros for "Almost No Impact"

I have been trying to get hold of a (free) copy of a new report by the Swiss bank UBS which various media outlets have cited as damning the European carbon Emissions Trading Scheme (ETS). No luck so far, but what has been reported is pretty grim. From an op/ed by indefatigable and indispensable climate change skeptic Benny Peiser: 

European consumers are facing up to the reality that their political leaders have already squandered more than 200-billion euros ($277-billion) on completely inane and ineffective climate policies. A new report by Swiss bank UBS reveals that the EU's emissions-trading scheme has cost European consumers 210-billion euros for "almost zero impact" on cutting CO2 emissions. It warns that the EU's carbon market, which has collapsed in recent days, is on the verge of annihilation once the Kyoto Protocol runs out next year.

From a news artlcie in The Australian

In a damning report to clients, UBS Investment Research said that had the €210bn the European ETS had cost consumers been used in a targeted approach to replace the EU's dirtiest power plants, emissions could have been reduced by 43 per cent "instead of almost zero impact on the back of emissions trading".

Describing the EU's ETS as having "limited benefits and embarrassing consequences", the report said there was fading political support for the scheme, the price was too low to have any significant environmental impact and it had provided windfall profits to market participants, paid for by electricity customers.

Actually, according to an April, 2011 study (blogged at Hit & Run) by the German Economic Research Institute the ETS has had the unintended consequence of encouraging investments in fossil fuel electricity generation. It bears quoting again: 

Despite political activities to foster a low-carbon energy transition, Germany currently sees a considerable number of new coal power plants being added to its power mix. There are several possible drivers for this “dash for coal”, but it is widely accepted that windfall profits gained through free allocation of ETS certificates play an important role....

We find that technology specific new entrant provisions have substantially increased incentives to invest in hard coal plants compared to natural gas at the time of the ETS onset. Expected windfall profits compensated more than half the total capital costs of a hard coal plant....

While German policy-makers intended not to hamper investments in the power sector by carbon regulation, they designed an allocation scheme which in the end created perverse incentives and massively promoted investments into emission-intensive hard coal plants. Obviously, policy makers failed to take the effects of free allocation-related windfall profits on coal profitability into account. We have thus shown that the details of implementing carbon regulation can be extremely important in a dynamic perspective. Different allocation regimes may not just have distributive effects, but also important consequences for investment choices.

Although the analysis has a retrospective focus, our findings are relevant in support for current policy-making. We conclude that by introducing full auctioning of emission permits from 2013 on [National Allocation Plan III] (NAP III) Germany is providing the right incentives from an environmental perspective. However, the new coal capacity brought on the way has created a heavy burden for ambitious future transition to lower carbon intensity.

Not only have billions been wasted; governments have figured out how to waste billions in such a way as to encourage investment in the very power generation technology that is supposed to be phased out by the subsidies. Just brilliant!

And if the U.N. climate change conference that just kicked off earlier this week in Durban, South Africa can't find some way to put the Kyoto Protocol on life support, there won't be any need for the Germans (or anyone else) to bother with auctioning carbon credits since they will be worthless. 

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  • ||

    Testing the 3rd-party filtering.

  • ||

    what is 3rd-party filtering in this context?

  • ||

    It's the term used by the H&R bot on about 90% of the comments I've made (under different but familiar handles) in the last week or so, when it refuses to post and gives me the email of the Reason webmaster.

    I must say that the humans have been really helpful, but they have no better idea what's going on than I do.

  • Scruffy Nerfherder||

    Somewhere, Al Gore is rubbing his hands together while contemplating his next move...

  • ||

    Well, hallefarginluya!

  • ||

    And the climate change scam is starting to show its true colors. Who could have predicted this? Oh wait...

  • Bingo||

    Just think of all the Green souls that were created and/or saved by Mother Gaia because of these penances.

  • ||

    "And if the U.N. climate change conference that just kicked off earlier this week in Durban, South Africa can't find some way to put the Kyoto Protocol on life support, there won't be any need for the Germans (or anyone else) to bother with auctioning carbon credits since they will be worthless. "

    Why does ron say this like it is a bad thing? Ron now you can investigate the massive conspiracy that you denied existed for the last 10 years.

  • CrackertyAssCracker||

    How can Reason be so anti-science as to point this out?

  • Unintended Consequences||

    I love me some me!

  • CatoTheElder||

    Only the naive think that the consequences were unintended.

  • ||

    Only the naive think that the consequences were unintended.

    Never ascribe malice when incompetence can explain.

  • cynical||

    No, I think greed works well enough here.

  • The Other Kevin||

    Obviously the right people weren't in charge.

  • CatoTheElder||

    Having personally dealt with the EU parliamentarians, the EC bureaucrats, and the NGO functionaries on the European carbon trading scheme, I can assure you that they are quite sincere: true believers in the goodness of government and its necessity to save the planet from the impending doom of anthropogenic climate change. They are also quite intelligent and almost every one I met held a graduate degree from one or another of Europe's most prestigious universities.

  • Pip||

    So what's your point?

  • ||

    Shorter CatoTheElder

    TOP MEN!

  • ||

    Or that there are no right men.

  • jtuf||

    They are also quite intelligent and almost every one I met held a graduate degree from one or another of Europe's most prestigious universities.

    Those 2 clauses contradict each other.

  • jtuf||

    In fact. The prestigious degree shows that they are willing to pay massive costs for a piece of paper that certifies them as "superior". No wonder they bought into Kyoto.

  • Are you fucking retarded?||

    or...

    the decided to become experts in a field only available in a research university

    seriously, you're an imbecile

  • ||

    my child went to public school 1.5 years...the main thing they "educated" him on was recycling and the extinction of polar bears...reading/writing/logic/math...those aren't part of what passes for "education" anymore....so it is not surprising the most "educated" Europeans were true believers.

  • ||

    the people running the scam need true believers to make it work...I'm sure Ronald actually believed tax and trade was a good idea as well. Brainwashed motherfuckers.

  • Fist of Etiquette||

    No impact? 210 billion euros sounds like a lot of money. Wasting it must have had some impact on something.

  • Brandon||

    Well, it's increased their debt load by 210 billion Euros, so they've got that going for them.

  • Anonymous Coward||

    but it is widely accepted that windfall profits...

    Expected windfall profits...

    Obviously, policy makers failed to take the effects of free allocation-related windfall profits...

    I'm about to have a bloodclot continually reading the use of the word "windfall" as though the German energy companies just happened to find several billion Euros while riding in a taxi or they won the lottery. Last I checked, the word "windfall" referred to an unexpected or unearned advantage or gain.

    This ETS certificate scheme and the profits derived from it were entirely expected to even blind men if energy producers could report their own emissions and then bank or trade the excess certificates that resulted from underreporting. And unearned? Gaming the system takes work. It takes planning. Profit doesn't fall from the sky. Santa doesn't leave under good little boys and girls' trees. They did earn it, albeit in an entirely rent-seeking and sleazy fashion, but fuck, when a new mouse-trap comes out there will be a few mice smart enough to beat the trap.

  • rts||

    The meaning of "windfall" (especially as applied to profits corporations make) has morphed lately into "too much", where "too much" is anything greater than zero.

  • ||

    In 1974, David Lewis, the leader of the left-wing New Democratic Party in Canada, ran a campaign around the issue of "Windfall Profits" - focusing mainly on the oil companies which were doing well at the time due to the first round of OPEC price hikes.

    A reporter challenged Mr. Lewis to define what was an 'acceptable' level of profits. Mr. Lewis said 8 percent ROI was acceptable.

    The reporter asked if that was before or after taxes.

    "After taxes." Mr. Lewis replied.

    The reporter then asked if that was before or after inflation.

    "After inflation." Mr. Lewis replied again.

    The reporter then gently pointed out to Mr. Lewis that, based on the level of inflation and taxes at the time, Corporations would have to earn 35% ROI to meet that goal.

    Mr. Lewis had no reply.

  • rts||

    If ever the NDP form a federal majority government, we're fucked.

    Proper fucked if you also live in a province with an NDP majority.

  • Holy Cow||

    "climate change skeptic Benny Peiser"

    Sorry, but this a bit too highbrow for me. Can't we just call Mr. Peiser "Not a fucking idiot"?

  • wareagle||

    ^^^^this. Seriously, when did calling bullshit bullshit require the use of a pejorative description of someone? And, 'climate change skeptic' is meant to be a pejorative.

  • ||

    How in hell is skeptic a pejorative? I'm skeptical of a whole bunch of shit including most of the claims surrounding climate change, and I'm proud of it.

    Ron usually has a tradition/habit/foible of using the disparate parties' pejoratives for each other. i.e. warmists & deniers.

  • ||

    IF you think that C02 emmissions are causing global warming,

    And IF you think that the government must act,

    then only a pricing model will act properly to both reduce C02 emissions and encourage efficiency.

    IOW, if you are going to 'do something', impose a carbon tax so that the activity you are trying to reduce is the one you penalize.

    Nothing else will work. "Carbon offsets" only help bureaucrats and the politically connected.

  • wareagle||

    impose a carbon tax so that the activity you are trying to reduce is the one you penalize.
    -------------------------------
    but if you impose a stiffer income tax, govt believes there will NOT be a reduction in anything.

  • ||

    are you... are you trying to intimate that government flunkies are stupid? Unpossible!

  • Mark||

    Aresen -- Bingo! And to think that the "politically connected" in the US (large Ag companies) have been pushing to get this here. That's what the Chicago climate exchange is -- a way to transfer wealth the the politically connected.

  • CatoTheElder||

    Back in the day, Enron was a big proponent of carbon trading as well.

  • ||

    Exxon, Shell, BP, GE, Gingrich, Pelosi...even George Bush promoted the CO2 tax scam

  • Holocaust Surviver||

    "I have been trying to get hold of a (free) copy of a new report by the Swiss bank UBS"

    Getting documents from those people is like pulling teeth.

  • ||

    - pulling teeth from an uncooperative apatosaurus.

  • ||

    Think about this for just one minute: Walk through your typical workday from the moment your electric alarm clock rings, until you switch off your electric lamp: given that 99% of what we do uses power, name one thing that you do, you would for-go forever?

    That one thing probably represents 1%, now name twenty things you must sacrifice....

    See the problem yet?

    Now tell me again what earth-shattering crisis's dictates all this stone-age austerity?
    Because I'm not seeing it. And I'm not alone.

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