Cyrillic Partners

Tradable emissions permits markets were all the rage when I was in school. It seemed like the perfect opportunity to solve a social problem in a sane, economically-justified libertarian way. The professors painted a picture of economists saving the day by pointing the invisible hand of the marketplace toward an intractible social problem.

Well, fast forward a few years and the cracks in the system are starting to show. My friend Katie Fehrenbacher’s great site, Earth2Tech.com, has a great description of what’s going on:

The fragility of the nascent carbon offset economy is front and center this week. As the U.N. was kicking off its Framework Convention for Climate Change in Bali yesterday, on the other side of the world Irish certified emission reduction (CER) credit provider AgCert saw its stock tumble over 70 percent. The collapse occurred following the company’s announcement that it would not be able to deliver all of the 7.2 million tons of United Nations-approved carbon offsets if had committed for 2008.

This follows Friday’s report from the WWF that a full fifth of U.N. carbon credits issued through the Clean Development Mechanism (CDM) are bogus and actually increase emissions. None of this bodes well for the struggling carbon market. The cap-and-trade carbon solution is the favored mechanism for carbon emissions control, but the U.N.’s top climate change official Yvo de Boer warned last month at the Carbon Forum Asia that the carbon trading market “could disappear more quickly than it appeared.”

Reporter Craig Rubens does a good job of wrapping up the recent developments in cap-and-trade systems and says that much of the future of the current carbon trading program relies on what happens in Bali in the next two weeks.

We’ll be keeping an eye on it.

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