White Out in Carbon Market as Auction Fails

White Out in Carbon Market as Auction Fails

Could the 18th January be the day that national governments and legislators were finally jolted into action to rescue the EU carbon market?

On the day that most of London was snowed in with the heating on full blast, there was a major shock as a large carbon auction being run by the German government on the new EU platform failed for the first time.  That failure will result in supply being deferred to later auctions, and Germany not receiving anticipated income from the sale.

As carbon prices plummeted on the news, EU Climate Commissioner Connie Hedegaard took to Twitter to call for legislators to act on the Commission’s proposal to remove supply from the system:

Desperate times call for Twitter

Desperate times call for, urm, Twitter?

Meanwhile the EON SE (Germany’s largest utility) CEO described the European carbon market as “a joke the whole world laughs about”.  There has also been stinging criticism of the Commission this week from a lobbying group claiming that discretionary changes to the rules of the trading system were worrying the market.

These are tough times for the supporters of the EU ETS.  Prices are on the floor and solutions to the structural problems that have led to the fall in prices still look a long way away.

But when governments feel it in the pocket, action tends to follow.  Germany has not received a chunk of cash today.  Will that be the catalyst for a more dynamic approach to reforming the entire system?

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