CARBON MARKET RISING

Carbon emission prices extend gains in Europe/President Bush calls for global emission targets; trading volumes hit highs
Simon Kennedy, June 1, 2007 (MarketWatch from Dow Jones)

WHO
President Bush, James Connaughton, chairman, Council on Environmental Quality/top Bush environmental adviser, Australian Prime Minister John Howard

WHAT
Emission permit prices rose in European trading following President Bush’s surprise pronouncement that global emissions limits are necessary but must include developing nations like China and India. He also suggested meetings between the US, China, India and other major emitters, global reduction goals through 2008 and methods of reaching them. Australian Prime Minister John Howard made a similar statement.

WHEN
Bush’s announcement came June 1.
The futures trading on 2008 emissions went up 4.8% to 24.10 euros/ton.

WHERE
The most authentic emissions trading market right now is the European Climate Exchange (ECX), based in London, because it involves EU nations who have agreed on mandatory caps.

WHY
- Emissions credits have been trending up since February from a low of 12.5 euros/ton.
Volumes are also up.
- The trends reflect a new tougher attitude about credits by the EU for Kyoto Phase Two, which begins in 2008. Credits had been misapplied in Phase One and the price had fallen to near zero. The impression is that the EU learned from the mistakes.

- New controls are also being established over carbon offsets between industrial and developing nations.
- Low emitting companies sell excess credits to companies which need to emit beyond their pre-established mandatory caps.

QUOTES
- Bush: "The United States takes this issue seriously…My proposal is this: By the end of next year, America and other nations will set a long-term global goal for reducing greenhouse gases."
- Connaughton: "We've been very concerned about cap-and-trade proposals . . . largely on the grounds that they have tended in the context of climate change not to work very well…"