The carbon market has been damaged by three “whopping falsehoods” that slowed its growth and caused European lawmakers to question their belief in the system, said the retiring head of a carbon market lobby group.
“The political environment has been dominated by an ebb tide,” Henry Derwent, chief executive of the International Emissions Trading Association, said today by phone from Geneva on his last day at the lobby group’s headquarters. “The European Union emissions trading system is still there, though it’s bleeding from a few wounds, some self-inflicted.”
The first lie is that climate science is exaggerated, boring and unimportant, Derwent said. The second is that nations shouldn’t protect the climate because others aren’t and the third is that markets are not the best solution, he said. “It’s not surprising that those who don’t want to do anything are seduced by the falsehoods.”
EU carbon permits have plunged 80 percent since peaking at 34.40 euros ($45.17) a metric ton in 2008, the same year Derwent joined IETA as president. He previously helped advise U.K. Prime Minister Tony Blair. Stagnant economic production has exaggerated an oversupply of allowances in the EU, and almost-non-existent demand outside the bloc has deepened the surplus. Cap-and-trade legislation stalled in the U.S. Senate after narrowly passing the House of Representatives in 2009.
Carbon permits for December fell 4.33 percent today to 6.85 euros on the ICE Futures Europe exchange in London as of 12:18 p.m.
Advice to Successor
IETA should have joined with other business and environmental lobby groups around 2010 to better protect the idea of carbon trading, Derwent said.
“We really thought we were doing fantastically well,” he said. “We just did not realize how bad things could get. We might have managed to prevent it falling so far as it did.”
Dirk Forrister, the former climate adviser to U.S. President Bill Clinton, is replacing Derwent this week. “Watch out very carefully for the tides of changing opinion” is Derwent’s advice to his successor. “We must make sure that we don’t get beached by this ebb tide.”
The U.S. should not argue against climate protection on the grounds that China and other nations aren’t doing anything, because that’s not true, Derwent said. China has started carbon-market pilot programs, while Australia, Korea and Mexico are among other nations moving toward trading, he said.
Derwent said his biggest achievement was modest: “Keeping the show on the road during a great push back. You are seeing the idea of emissions trading continuing.”
Some European Union lawmakers are doubting that carbon markets are the answer to climate change, Derwent said. “It’s a shame to see the EU collectively losing its belief.”
European Commission officials governing the bloc’s market, including Jos Delbeke and Peter Zapfel in Brussels, have “not lost the plot,” Derwent said. “They were and remain heroes. Their ability to prevail over other directorates-general is weakened substantially.”
The EU program, the world’s biggest by traded volume, was damaged in part because of avoidable thefts of carbon allowances and tax fraud, Derwent said. He urged carbon traders to see beyond current prices, which reached a record low last month. “Look further up the road. Don’t look at your feet.”