Financial Times: Judge a carbon market by its cap, not its prices

posted on July 16th 2013 | 0 comments

FTNo one questions the very existence of stock markets when prices rise or fall. Not so for carbon markets. In April, prices in the EU’s emissions trading scheme fell to record lows of below €3 a tonne of carbon dioxide, after an unsuccessful vote in the European parliament to prop up prices. Observers wrote obituaries.

This month, in its second vote, the parliament approved a plan to “backload” carbon allowances and thus limit supply temporarily. Prices rose, though barely above €4, far below its high of above €30 five years ago. But while the price has grabbed the headlines, it is fundamentally the wrong focus. It also detracts from the fact that the ETS has succeeded at its most important job: cutting pollution.

Continue reading at FT.com.

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