The carbon market is the lynchpin of EU climate policy. And from this article in Speigle Online, it appears the market is down for the count:
For those involved in European Union climate policy, the German regional election in Lower Saxony on Sunday was a nail-biter. The hope for many was that Germany's pro-business Free Democratic Party (FDP) would suffer defeat and leader Philipp Rösler, who has been under pressure within his party for weeks now, would be forced to step down as economics minister. But that didn't happen. Instead, Rösler ended up in a stronger position than before, and the flagship project of Europe's climate policy settled deeper into a lifeless coma.
Rösler is against a short-term plan to boost prices on the European Emissions Trading System (ETS), while Environment Minister Peter Altmaier of Chancellor Angela Merkel's conservative Christian Democratic Union (CDU) party favors it. Rösler opposes any intervention in the carbon market and stands by the market process that has resulted in a collapse in the price of carbon allowances. The plan, called backloading, would take 900 million carbon allowances out of the system temporarily to help boost the carbon prices and partially relieve a massive glut. But the German government is split on the plan, with Merkel remaining on the sidelines. Whatever happens, market players say it is already clear that Germany's stance will be pivotal.
"I have been surprised about how unwilling Angela Merkel has been to step into this debate and resolve it on behalf of the government," said Mark Lewis, a climate market analyst at Deutsche Bank. "It's extremely frustrating. It's taking longer and longer. And as a result, the market is going lower and lower."
The German Chancellery did not respond to a request for comment.
The ETS is now in its crucial third phase -- one in which it was to reduce the number of carbon credits available on the market, forcing prices up and pollution down. However, too many carbon credits were issued in the early years and companies produced less in the downturn, resulting in a surplus of credits. Prices have gotten so low that Germany recently cancelled an auction of carbon credits for the first time, after no bids came in at the minimum price.
How can they call it a "market" when the few rich guys who trade in it want massive government intrusion to keep them from losing money?
It's not a "market" in any sense of the word. It is a crony capitalist gimmick to make the rich richer while making products produced in factories more expensive for the ordinary citizen.
But the carbon traders shouldn't worry. The EU has so much invested in this scheme that they are going to find a way to make it work - even if nobody much wants it. That is the essence of government according to the European Union and ordinary people are going to be paying for the mismanagement of this "market" for the foreseeable future.