The Climate Report - Winter 2011
At the close of trading on September 22, 2010, prices for a credit representing avoidance of one metric ton of carbon dioxide equivalent emissions in December 2010 was as follows:
Market |
Price |
€14.09 |
|
€11.23 |
|
$1.91 |
|
$2.38 |
|
$12.22 |
A combination of factors—the lack of a mandatory
nationwide cap and trade system in the United States, the ongoing
economic recession, and emission reduction goals that have been
achievable without the need for
allowances or
offsets—continue to depress the price of carbon
allowances.
Decreasing demand resulted in the announcement in October that the
Chicago Climate Exchange, known as CCX, would end its program for
trading greenhouse gas emission allowances at the end of 2010 and
become solely a registry for offset emission credits. CCX was
launched in 2003 as a voluntary "pilot" carbon emission
trading market for carbon emission allowances, called Carbon
Financial Instruments, each of which represented the elimination of
one metric ton of greenhouse gas emissions.
The market value of CCX carbon allowances peaked in the fall of
2008 at approximately $7 per ton, but by the fall of 2009, the
allowances had dropped to approximately 10 cents per ton. By fall
2010, the allowances were virtually worthless and trades were
becoming few and far between. In August 2010, no allowances were
traded and only 10,200 tons were sold in September. Without viable
buyers, the cost of running the exchange was no longer warranted.
CCX's registry and trading services will, however, remain
available through the middle of 2011 for existing emission
allowance contracts. With its new focus exclusively on offset
projects, CCX plans a new offset registry program in 2011 and 2012,
which will include a publicly available registry and a transfer
mechanism to process trades.
The economic climate has also affected the
RGGI. Only 57 percent of the carbon allowances offered for sale
during RGGI's most recent
auction on December 1, 2010 were sold for the minimum reserve
price of $1.86. The previous auction, in September 2010, sold only
75 percent of available allowances. Decreasing allowance prices
over the past several RGGI auctions
have been attributed to decreased electricity demand,
utilities' increased use of alternative fuels such as natural
gas, and utilities' increased use of alternative technologies,
such as nuclear, wind, and hydroelectric power.
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