Eastern European allowances reveal weakness of the EU carbon market

Only in Poland and Estonia there will be extra 80 – 90 tons of CO2 emitted in the atmosphere in one year. The two countries won court challenges against the European Commission limits on carbon-dioxide emissions by energy and manufacturing companies.

This decision of the European Court of First Instance took the market by surprise, said Daniel Butler, carbon trader and Senior Consultant at the Czech based Wallich & Matthes. The market was down anyway and we expected a downward trend. However, this made the market to drop hard, it was the straw that broke the camel’s back. If early September 2009 a carbon certificate revolved around EUR 15, now it might get to EUR 8, argues Butler.

The European Court of First Instance in Luxembourg ruled in its Judgment that the European Commission has a restricted authority to review national plans for allocating CO2 permits in the EU emissions trading system, ETS – European Trading Scheme, the biggest greenhouse-gas market in the world today. The Commission set tough CO2 limits on Eastern European Member States.

The European Commission, however, is contemplating an appeal to the European Court of Justice.

More similar cases are pending from Hungary, Bulgaria, the Czech Republic, Latvia, Lithuania and Romania.

The rulings may undermine a push to curb the supply of CO2 allowances in the EU market as six other nations in Eastern Europe demand looser limits. With the United Nations negotiating an accord to fight climate change, the Commission aims to make fossil fuels more expensive and turn the European emissions trading system into the cornerstone of a global market.

The Copenhagen deal in December does not look good from this perspective, believes Butler. USA and China seem to want to go separately and not link to a global market. I would not say that this is the end of the carbon market but it sure induces a lot of pessimism. At the moment we talk (September 25, 2008 a certificate is worth EUR 12.5). And that is not all: many carbon funds will close down.

Probably the extra tons of carbon will not affect the atmosphere too much as the European production market is very weak. Steel mills work at a little capacity, industrial centers are slow, there is an obvious economic slow down and that means less carbon, explains Butler.

In October 2008, as the financial crisis started to bite, a ‘rebellious’ group of EU Member States pressed for a deferment of the date at which EU’s plans for emissions targets were supposed to be accepted as binding. A group of Eastern European nations and Italy were gathered into a protest against emissions reduction. The leaders of the ‘revolt’ were the Italian Prime Minister, Silvio Berlusconi, and his Polish counterpart, Donald Tusk. Governments of Bulgaria, Hungary, Estonia, Latvia, Lithuania, Romania and Slovakia followed them.

Global Impacts of a Warming Arctic Surpass Predictions

Warming in the Arctic could lead to flooding affecting one quarter of the world’s population, substantial increases in greenhouse gas emissions from massive carbon pools, and extreme global weather changes, according to a new WWF report.

The Arctic Climate Feedbacks: Global Implications report, released today, outlines dire global consequences of a warming Arctic that are far worse than previous projections. The unprecedented peer-reviewed report brings together top climate scientists who have assessed the current science on arctic warming.

“What they found was a truly sobering picture,” said Dr. Martin Sommerkorn, senior climate change advisor for WWF’s Arctic programme. “What this report says is that a warming Arctic is much more than a local problem, it’s a global problem.”


“Simply put, if we do not keep the Arctic cold enough, people across the world will suffer the effects.”

The report shows that numerous Arctic climate feedbacks – negative effects prompted by the impacts of warming -- will make global climate change more severe than indicated by other recent projections, including those of the Intergovernmental Panel on Climate Change’s 2007 assessment.

The dramatic loss of sea ice resulting from the Arctic warming at about twice the rate of the rest of the world will influence atmospheric circulation and weather in the Arctic and beyond. This is projected to change temperature and precipitation patterns in Europe and North America, affecting agriculture, forestry and water supplies.

In addition, the Arctic’s frozen soils and wetlands store twice as much carbon as is held in the atmosphere. As warming in the Arctic continues, soils will increasingly thaw and release carbon into the atmosphere as carbon dioxide and methane, at significantly increased rates. Levels of atmospheric methane, a particularly potent greenhouse gas, have been increasing for the past two years, and it is suggested that the increase comes from warming arctic tundra.

In a first-of-its kind assessment incorporating the fate of the ice sheets of Greenland and West Antarctica into global sea level projections, the WWF report concludes that sea- levels will very likely rise by more than one meter by 2100 -- more than twice the amount given in the Intergovernmental Panel on Climate Change’s 2007 assessment that had excluded the contribution of ice sheets from their projection. The associated flooding of coastal regions will affect more than a quarter of the world’s population.


“This report shows that it is urgently necessary to rein in greenhouse gas emissions while we still can,” Sommerkorn said. “If we allow the Arctic to get too warm, it is doubtful whether we will be able to keep these feedbacks under control.

WWF has joined with other NGOs to produce a model climate treaty for Copenhagen that gives the world a blueprint for achieving the kind of emissions cuts needed to likely avoid arctic feedbacks.

“We need to listen now to these signals from the Arctic, and take the necessary action in Copenhagen this December to get a deal that quickly and effectively limits greenhouse gas emissions,” said James Leape, director general of WWF International.

In December 2009, the governments of 191 countries will meet in Copenhagen, Denmark, for the final round of negotiations for a new global agreement on climate change. The first period of the current agreement, called the 'Kyoto Protocol', will end in three years, in December 2012. The negotiations in Copenhagen are supposed to approve a new legal framework for global climate action from 2013 onwards.

According to WWF, this framework must guarantee much deeper and more rapid emission cuts from industrialized countries, and financing to developing countries to enable them also to take climate action.