Tomorrow is going to be interesting. Climate Camp have decided to make the institutions involved in carbon trading their target for the day, while the machinery of Brussels is gearing up to issue updated data illustrating how carbon trading is working on the ground.
We are interested in both. I’m pleased that the activist community has woken up to the fact that emissions trading exists. I don’t support their means, or their calls to scrap trading, but I share the frustrations many have that we are evidently much better at working out ways of making money than we are at figuring out how to tackle climate change. Emissions trading is supposed to do both but it needs to be implemented with much more courage and conviction than it has been to date. Any pressure Climate Camp can bring to bear could help to swing the political pendulum towards tougher action – politicians shouldn’t need protestors in the streets in order to do the right thing but sadly it seems sometimes they do.
The data release of course is much more our scene. This year, for the first time in this phase, we will be able to accurately compare recent emissions with current allocations of permits. Last year we attempted a partial comparison using 2007 emissions data and for the UK it revealed that roughly two thirds of the companies in the scheme held more allowances than they needed – sharing an approximate surplus of 9 million tonnes worth then around £200 m. Of course since then the carbon price has crashed to around half of what it was – partly because companies sitting on surpluses decided it was time to cash in and make some money.
We are looking forward to uncovering what tomorrow’s data can tell us about emissions in the UK and Europe and what the implications are for the future of the trading scheme. The economic downturn will have caused many more firms to cut back on production and demand for electricity may also have shown a decrease, although the cold weather over this winter may have helped to keep demand up. Commentators are predicting that the emissions will be 5% down on last year. If they prove to be lower than this it may push carbon prices even lower since it will mean more spare allowances floating around.
A further weakening of the carbon price will add fuel to the fire of those calling for trading to be scrapped. But it also supports those who are calling for a radical increase in the caps on emissions from 2012 onwards. This can still be implemented and is the simplest way of getting the price higher and the private energy sector to take the need to reduce emissions seriously. This is what we are calling for and we hope the net effect of tomorrow pushes more people to realise that it’s the only sensible way forward.