186 Development Dialogue September 2012 | What Next Volume III | Climate, Development and Equity
It ha not worked thi way in practice, however� The optimitic orecatin Figre 1 were made in mid to late 2009, jt month ater the carbonprice had halved (rom a peak o €31)� Since then, it ha crahed again,with permit rom the Eropean Union Emiion Trading Sytem (EUETS), which accont or over 80 per cent o the global market, allingbelow €6�50 each� Thi led a enior climate change advior to Shell oilcompany to warn o ‘a vicio downward piral’, while the CEO o German tilityE�ON, one o the larget player in the cheme, wa evenmore blnt: ‘The ETS i bt, it’ dead,’ he aid, adding that it gave noignal or low-carbon invetment (Krkowka 2012)�How cold the theorit and market practitioner have got it o wrong?In ggeting that a carbon price hold incentivie clean invetment,and that a market i the mot efcient mean to allocate that price, pro-ponent o carbon trading have ollowed a narrowly economitic viewo the climate change problem, taking little accont o the complexitieo commodity-ormation, or the reglar trmping o environmentalgoal by competition and trade policy in the allocation and rle-ettingarond carbon allowance�Thi article oer a dierent accont, arging that the collape in car-bon price i ymptomatic o deeper aw in the attempt to commodiy‘carbon’ a a oltion to climate change� The rt two ection look atthe two main type o carbon trading - ‘cap and trade’ and ‘oetting’�An otline o the perormance o the EU ETS, the larget cap andtrade market, how that the cheme ha ailed to place any meaningl
200520062008200920102012201320152016201720192020202145 €16,1 €/t30,4 €/t42 €/t33,6 €/t25,3 €/t19,2 €/t18,4 €/t15,5 €/t13,3 €/t40 €35 €30 €25 €20 €15 €10 €5 €0 €EUA spot BluenextMeanMean + standard deviationMean – standard deviation
Figure 1. Trend o price orecasts orEuropean emissionallowances.(Prada, Barbéris andTignol, 2010: 35).