Who Knew?: European Carbon Market Is An Expensive Failure

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At the United Nations climate change conference in Durban last December, the European Union graciously agreed to keep the faltering Kyoto Protocol alive by committing to continue operating its European Trading Scheme (ETS) carbon market. At Durban, the EU essentially agreed to impose higher energy prices on its citizens in the hope that somehow this would encourage the rest of the world to do the same thing by 2020. The principle seems to be: "If I bash my head with a baseball bat now, maybe you'll bash yours in a couple of years." Go figure. 

One of the chief goals of boosting the price of energy produced by burning fossil fuels is to encourage a shift toward energy generated by "cleaner" solar and wind power. How's that working out? Not so well, according to the Financial Times. The FT reports: 

Johannes Teyssen, chief executive of Eon, the German energy group that is one of Europe's largest, stunned an audience in Brussels last week when he pronounced the market broken. "Let's talk real," he said. "The ETS is bust, it's dead."

Upon its launch seven years ago, the market was supposed to work on a simple premise. Proponents hoped that by putting a price on carbon and forcing companies to pay for their emissions, it would prod Eon and others to pour money into green technologies and greater efficiency. But, as a result of a subsequent recession and poor management, the market is saturated – and could be for years to come – with permits that give companies the right to emit carbon without penalty. That has led to a prolonged slump in the carbon price. At roughly €7 per tonne, compared with a peak of nearly €30 in July 2008, it is a fraction of what policymakers and analysts had forecast it would have reached by now – and well below the levels necessary to justify the desired investments.

"I don't know a single person in the world that would invest a dime based on ETS signals," Mr Teyssen declared.

So how to fix this broken "market" in carbon permits? Impose government price controls, of course. 

Go here to read the whole excellent FT article. 

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78 responses to “Who Knew?: European Carbon Market Is An Expensive Failure

  1. At Durban, the EU essentially agreed to impose higher energy prices on its citizens in the hope that somehow this would encourage the rest of the world to do the same thing by 2020. The principle seems to be: “If I bash my head with a baseball bat now, maybe you’ll bash yours in a couple of years.” Go figure.

    There are people convinced that the high rates of taxation and the size and scope of their welfare state are a good thing to emulate, so maybe the EU statesmen were not off the mark in trying to convince the same unintelligent and gullible admirers of the merits of burning their economies to the very ground with the hope of saving the planet.

    1. Anyone who still believes today that America should follow the European economic model in any way deserves to get his ass kicked.

  2. But, as a result of a subsequent recession and poor management, the market is saturated ? and could be for years to come ? with permits that give companies the right to emit carbon without penalty.

    Supply and demand – how does that work, again?

    1. Supply and demand – how does that work, again?

      However we say it does!

      1. If Red China ever mounts an invasion of Europe, will you request them to use clean energy in their heavy armor?

        1. If Red China ever mounts an invasion of Europe, will you request them to use clean energy in their heavy armor?
          What can I say? Here in the EU, we like our Reds to be Green.

        2. They will be wearing Stealth Armor, so we won’t see them.

    2. Markets are not organic, they are artificial. People only want what they have been told they want, so if we tell them they want carbon credits, they will buy carbon credits.

  3. If climate change crisis truly were real, we would see at least some of the millions of people involved in the global scientific community marching in the streets to save “their” children, not just the dozens of climate blame protesters we see now. Science does not act like unstoppable warming and catastrophic climate crisis from Human CO2 was real and 26 years of needless panic from a crisis exaggerated made fear mongering neocons out of all of us. Studying the effects, not causes of an assumed crisis is perfectly legal. It wasn’t a hoax; it was a feeding frenzy of exaggeration and a consultant’s wet dream come true. And just so you know, history will note that “no crisis” was good news for real planet lovers. Why would we want this misery to be real?

  4. George Clooney’s fucktarded character in ‘The Ides of March’ advocated the prohibition of internal combustion engines. Multiply this dumbfuckery by 100, and you have the average Eurostatist.

    Nothing the European Union does should ever be taken seriously, to any measure.

    1. Nothing the European Union does should ever be taken seriously, to any measure.

      I take the things that the EU does very seriously. When the drunk guy falls into a river and gets eaten by a previously unseen alligator, it’s good to take notice and cancel your plans for a skinny dip.

      1. Lol. +1.

  5. here’s ur cap n trade business model (no shit btw) –

    1)build a massive wingturbine farm in NW ohio (like 20x40sq miles w turbines a 1km apart)…cause its flat & the wind avg is like 15mph.
    2)sell expensive carbon offsets to waiting cor pa ra shuns.
    3)and sell the power which will equal the perry nuke plant (which si just north).
    4)hire monkeys to buy mega-ball tickets & shoot my junk & butt w lasar pointers when im admonishing their business model.

  6. “If I bash my head with a baseball bat face with a football cleat now, maybe you’ll bash your head with a baseball bat in a couple of years.”

    1. Maybe I can be of some assistance?

      1. football = soccer in Europe

        1. For this joke to be authentic, you have to call it a boot.

          1. face = boot in Europe

  7. European Trading Scheme

    I know there’s at least one country over there that claims to understand English. Guess not.

    1. I dunno, I think this demonstrates perfect comprehension of the language. It’s a baldfaced truth!

      1. kinda like hiding right out in the open. pretty sneaky, europe, cheers.

      2. It’s more likely that scheme has a better connotation across the pond. I don’t think the UN would tell the truth about this even if they knew they could get away with it. Old habits die hard.

        1. And by UN I mean EU.

          1. UN. EU. You repeat yourself.

            1. Nah. The UN is for all the tin pot dictators from third world countries to grandstand and condemn the US.

        2. good point, they never had a Ponzi to ruin the word.

      3. In England the word ‘scheme’ does not have the negative meaning it has here in the US.

        There it simply means a plan or system. Short for schematic.

    2. It’s Arnaque in French.

      1. The french only have one word for “swindle?”

        English must have hundreds.

  8. So how to fix this broken “market” in carbon permits? Impose government price controls, of course.

    You didn’t think Al Gore was going to buy permits with his own money and retire them, did you?

  9. Related, King County, where I live, has a goal of reducing King County’s carbon emissions by 80% by 2050. 80%. Let that sink in. Eight zero.

    http://your.kingcounty.gov/dnr…..sions.aspx

    1. Shit, we’ll have fusion by then.

      1. Well, we WOULD have had fusion by then..

      2. No we won’t, because to get there, we all have to turn off our lights, become urban farmers and use tallow for light after dark.

        *Bring out yer dead!*

        1. Yes, can’t have useful technology that might help us achieve a form of post-scarcity society. That would result in too little control and too many scary choices for hoi polloi.

          1. But it is renewable carbon, so that’s ok.

            1. Sheep and cows fart too much.

      3. Obligatory:
        At that point, fusion will only be 20 years away!

        1. As I’ve noted before, it’s only always nineteen years away now. We’ve made progress!

          1. The problem is that Microsoft was contracted out to measure the official time remaining for fusion power.

      4. Re: Pro Libertate,

        Shit, we’ll have fusion by then.

        Yeah, and oodles of anti-Fusion organizations and NGO’s.

        PETA – People for the Ethical Threatment of Atoms.

        Mark. My. Words.

        1. It’s occurred to me. I imagine we’ll see opposition to anything cool. The Anti-Teleportation League.

          1. Wait till “see-through-walls” tech becomes economical for the average joe. That shit will be outlawed for private use so fast… just like some folks are trying to do with unmanned aircraft now.

    2. In King county you get all your power from hydro electric….I know because i live near all the dams that are powering your computer right now.

      Anyway it looks like in 2050 you will be walking to work…but the light in your house will still work.

      1. Why can’t they just tap into Rainier somehow?

        1. Maybe they are counting on Rainier burying Seattle in pyroclastic flows before 2050. That would work too.

          1. Maybe some sort of hydroelectric tapping into the mudflow?

  10. The idea that you can have a government-created market in anything, let alone a market based on the concept of NOT producing something, and ever see it reach equilibrium brings the lulz.

    1. It would be funny, if it weren’t in the process of ruining our civilization.

      1. It’s funny because it’s TRUE!!! LOL!

      2. Its funny because I don’t give much of a fuck any more.

      3. It is pretty sad and pathetic..
        I just can’t get worked up about this shit anymore..
        People clamored for “something to be done” about climate change, completely forgetting that it was government-produced alarmism, false data, and power lust that gave rise to carbon-neutral, carbon foot print, carbon credits.
        When this shit started I thought “fucking really? This is the best scheme you assholes can put forth to expand your influence? There’s no way people are this gullible and stupid.”

        Boy… was I wrong.

        1. Can we all agree that EVERYONE IS A STUPID ASSHOLE and move on with our lives? Btw..that should be every headline going forward.

          1. Yes we can. If and only If Reason endorses “EVERYONE IS A STUPID ASSHOLE” Headline Day.
            Also, the only accepted characters for the name submission field will be S-T-U-P-I-D-A-S-S-H-O-L-E for the entire day.

        2. Boy… was I wrong.

          Aside from the 100s of millions spent and misdirected on climate “research” (research in this case being fabricated ‘hide the decline’ graphs) and some half assed markets the impact of this boondoggle have been pretty small.

          Also public opinion polls are moving in a more sane direction. Both here and in Europe.

          1. Speaking of crazy left wing bullshit anyone notice they are calling Merkel a Nazi because she won’t dive into the stupidity that causing the rest of Western Europe’s economies to flatten.

            This stuff matters…when poeple follow less left wing policies and they don’t fall into ruin people take notice….and things do change.

            1. To be fair, she is German.

            2. What scared me was how easily a few billion people were so easily convinced that global warming exists and will cause the sea level to rise 800 feet and melt the surface of the earth within a few decades.. all because governments around the world are saying “carbon dioxide is a problem”.

  11. Ronald Bailey – in the future, please consistently put the word “Market” in scare quotes – where it belongs – when referring to carbon-credit schemes.

    I see you caught it in the last sentence.

    Thank you.

  12. Oh, and the Sierra isn’t turning into the Sahara:
    “Study: Sierra snowfall consistent over 130 years”
    From the article:
    “no evidence that anything has changed as a result of climate change, according to a study released Tuesday.”

    http://www.sfgate.com/cgi-bin/…..1N7HNQ.DTL

    1. “no evidence that anything has changed as a result of climate change, according to a study released Tuesday.”

      A study performed by:

      DENIERS!

    2. You notice it says weather didn’t change even though climate did.

  13. I remember all the people saying how this would save the planet AND be a market worth trillions at the same time.

    If you want to create a market, perhaps the first thing that is required is that it sells something somebody would want, since it is literally a market trying to sell air, how could anyone be surprised that it did not work.

    1. I’ve no doubt a futures market for “bowel movement permit” trading is in the works.

  14. Anyone with half a brain and one eye open could have seen this coming; the only shock, really, is that some European leaders are acknowledging it. But I’m still amazed that, having seen the brokenness of the carbon “market” already in action years ago, you’ve favored a carbon tax. There’s no reason whatsoever to believe a carbon tax system would be managed any better–indeed that’s naive in the extreme. But then, a couple of years ago the Climategate I and II leaks had not yet surfaced, and I wonder if now you’re still in (mistaken) agreement that there’s some kind of legitimate consensus on AGW being a real thing.

    Honestly though if CO2 truly is the crux of the problem, why are we focusing so much on targeting production instead of pursuing systems that would let us quickly absorb as much as we want into the biosphere? Surely a rapidly deployable carbon sink (“rapid” being on the order of a few months to a year) would be a better investment by far, and would create new jobs instead of destroying existing ones. I’d rather have the tools to deal with man-made CO2 and volcanic activity alike, than put the entire economy on a starvation diet and foolishly hope geology cooperates.

    1. Yeah, it woudl make a lot more sense to find a technical solution to the problem than to attempt to stop people doing what people do. The way I see it, even if the alarmists are completely correct about everything, there will still never be significant cuts to global CO2 emissions. As things get more efficient, people will do more with the resources available.
      But too many people want to make it a moral issue and force other people to live more simply because of some silly romantic ideal of a simpler life/back to the land sort of stuff.

      1. But too many people want to make it a moral issue and force other people to live more simply because of some silly romantic ideal of a simpler life/back to the land sort of stuff.

        And they’re usually people expressing this view from the comfort of their local Starbucks. They’ve never tried to scratch a living from the land themselves. No doubt they expect that in this future agrarian paradise they will be the supervisors, because of their advanced college degrees in ethnic studies and gay/lesbian/bisexual/transsexual poetry.

      2. . . . some silly romantic ideal of a simpler life/back to the land sort of stuff.

        I’d love to see the hipster doofus’ that push this shit go back to a “simpler life/back to the land.”

      3. Problem with both production controls and sequestering are that they require the government to oversee the response. Consumer carbon taxation (ironically) has the potential to be conducive to small government.

        Assume reducing climate change is neccessary to save the planet. If consumer carbon taxation is the solution it does infer as large as possible slice of the economy should be subject to taxation – which government programs aren’t. Serious consumer choice is inversely proportional to the size of the state and therefore the state must be reduced.

  15. They’re just calling it a “market” so that its failure can be called “market failure” and hence the only alternative is socialism.

  16. Wasnt there a report by USB or some bank that said that the whole european carbon trading scheme had done nothing but cost europe billions? As i recall, Ron was going to see if he could find a copy of that report. Ron, did that ever happen? Does that report actually exist or was it all some hoax?

    1. Yes, here it is:

      https://reason.com/blog/2011/11…..on-trading

      What about it Ron? Real or bull-shit?

  17. It worked out so well for ENRON!

    What could possibly go wrong?

  18. I think Nelson Muntz said it best.

    http://www.youtube.com/watch?v=aIrhVo1WA78

  19. The fact that there is a “market” for carbon permits makes me want to move to another planet.

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