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Saturday, June 12, 2010

Carbon trading price hits record low, perhaps a message for not staging mass protests against hands off approach to Gulf oil disaster by Obama

6/11: Bloomberg: "Carbon dioxide permits in the U.S. Northeast’s cap-and-trade program tumbled to a record low price at auction
  • amid a surplus of the pollution rights and doubts that Congress will create a national emissions market this year.

The Regional Greenhouse Gas Initiative sold 40.7 million permits for $1.88 each, 19 cents lower than the last auction held in March and 2 cents above the minimum allowable bid, the cap-and-trade program said on its website today.

  • Each permit in the carbon trading program for power plants from Maryland to Maine represents one ton of carbon dioxide.

Those permits come from the regional carbon trading program’s first phase, or “control period,” from 2009 to 2011.

  • This week’s auction, held June 9
  • with the results withheld until today,
  • also offered 2.14 million permits from the 2012-to-2014 control period. They went for $1.86.

Prices are a lot lower than expected,” Tim Cheung, an analyst with

“Demand for power hasn’t increased with the economic recovery and that means

  • there’s an oversupply of permits in the market.” *

Permit Surplus

The surplus of permits, also called allowances, is due to the gap between actual carbon dioxide output from power plants and the number of permits being issued by the Northeast states. The

  • states decided in 2005 how many permits to issue and left room for emissions to rise
  • before the 2009 start of the cap-and- trade program.

The auction price for permits peaked at $3.51 in March 2009 as Democrats in the U.S. House were preparing federal cap-and- trade legislation that would suspend the Northeastern market and convert its surplus permits into federal allowances.

  • Speculation that Northeastern pollution permits could be converted into federal allowances drew

Paul Tesoriero, director of environmental trading at Evolution Markets LLC in White Plains, New York, said in a telephone interview.

  • When the cap-and-trade legislation narrowly passed the House and stalled in the Senate, those “high hopes” faded and “you’re seeing the
  • financial players not participating” in the market alongside the power plants that have to buy the carbon dioxide permits to keep running, Tesoriero said.

“If there was another layer of financial players, there’d be more demand in the market,” he said.

  • With the “low probability” of Congress enacting a federal cap-and-trade market for carbon dioxide this year, prices are falling closer to $1.86 faster than expected, he said. “Everyone in the market knows this thing is heading to $1.86; it’s just when are we going to get there.”

In secondary market trading, December-delivered permits fell 10 cents, or 4.9 percent, to a record low of $1.96 each

"US Northeast Carbon permits draw record low price," by Simon Lomax, 6/11, via Tom Nelson. photo of oil choked bird on US coast by AP

  • *(There is no economic recovery.) ed.
Soros on carbon trading:
  • financial opportunities.”"
Update: 6/12, Politico, "ENVIRONMENTALISTS GIVE BARACK OBAMA A PASS ON OIL SPILL"

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