There are many steel, cement and other companies that have huge amounts of surplus emissions credits obtained through various means which now cannot not be traded or used easily due to the slowing of the global economy and the failure of many carbon markets. Ian Adlington, CEO of New Carbon Economics raises some questions on what he calls an impending Carbon Recession.
“How should the World’s carbon stakeholders quantify the workings of the carbon economy in reducing emissions, when so much of that decline in previous years was attributable to economic factors, rather than the way we generate and consume energy?
A more direct question is how the global economic slowdown affects the price of emissions credits on both the certified and the voluntary emissions markets?
A fundamental component of these markets, in simple terms, has been a reliance on various government initiatives from encouraging the purchase of carbon credits under various schemes, including cap-and-trade, to localized carbon taxation initiatives. Largely, these market schemes have failed. This factor, together with simple changes in pricing as a result of a supply and demand effect may, as a consequence, trigger what we may see soon to be a carbon recession. This means a glut of certified emissions credits (CERs) with a rapidly downward-spiraling price.”
There are more immediately effective and fairer market options than the existing government initiatives, especially the cap-and-trade schemes, that negatively impact the economies and lower the standards of living. At the same time, environmentalists who hoped that a slowing global economy could mean big falls in greenhouse gas emissions are most certainly, likely to be disappointed, said Ian Adlington, CEO of New Carbon Economics.
New Carbon Economics believes that straight forward finance mechanisms that stand outside government intervention and include the voluntary emissions reduction market in the monetizing of short lived climate forcers holds the significant key to avoid an impending carbon recession. In other words, let our planetary needs be balanced with free market economics that will encourage pricing equilibrium and resultant investment into more local carbon reduction projects.
A good example of these “politics of pollution” can be seen in the controversial power station project in South Bay in California, where a significant combative misunderstanding of these balances is being played out in the public view by non-collaborative stakeholders, including the courts, which is impeding localized carbon reduction and propagating carbon recession. The solution lies in collaboration, understanding the planetary and economic balances which promote anti-Carbon Recession effects.
- Pollution Allowances Get Tentative OK in California (hispanicbusiness.com)
- Will California And Australia Trade Carbon Credits? (kcet.org)
- Barack Obama should practice what he preaches about climate change (theguardian.com)
- We need a carbon deal on rainforests, and we have one (theconversation.com)
- Will President Barack Obama Bring New Energy for America? (newcarboneconomicsblog.wordpress.com)