The failure of the Copenhagen Climate Change Conference to produce a comprehensive agreement has indirectly led to a sharp decline in the price of carbon emissions permits in the European Union’s cap and trade system.(image: treehugger.com)

While most commentators have agreed that the climate talks at Copenhagen last December were a disappointment, there is now evidence suggesting that the failure of world leaders to reach a binding pact will have real-world financial repercussions, at least in Europe. According to an article published by BusinessWeek on Tuesday, the price of carbon emissions permits is falling in the EU’s cap and trade system, mainly because the unsuccessful Copenhagen conference did little to enforce current pollution regulations and even less to provide polluters with incentives to invest in clean energy. Put in a more alarming way: the longer pollution goes unchecked, the cheaper it becomes to emit greenhouse gasses.

This unhappy paradox is evidenced by the recent devaluation of carbon permits in Europe; the price of permits, each of which allows businesses and factories to emit one ton of carbon dioxide, have sunk 9 percent in London since mid-December, when talks in the Danish capital failed to produce a successor to the Kyoto Protocol, which expires in 2012. Europe’s current cap and trade system, started in 2005 as an outgrowth of the Kyoto accord, is the region’s primary method of cutting emissions; the EU carbon market, the largest in the world, covers about 11,000 companies, from energy producers to manufacturers.

The EU hopes to allot more than 2 billion permits a year through 2012, a cap mandated before the global economic crisis caused energy demand to decline. According to the system, those polluters that emit more than their quota must buy additional permits, while those that cut more than required can sell their surpluses. In this way, EU lawmakers have tried to create a system whereby costs rise as demand for pollution rights increases. But, as is the case with other commodities markets, when the confidence of investors flags, prices take a dip.

“There are surely two factors impacting carbon prices, the failed summit in Copenhagen and a probable surplus in the EU emissions-trading system,” said Jacek Kaczorowski, chief executive officer of Poland’s Belchatow coal-fired power plant, the biggest polluter in Europe. Any “sustainable recovery” in carbon markets is unlikely this year, he said. Indeed, according to Roman Richter, a trader at UniCredit Spa’s Carbon Solutions group in Munich, “There’s a bit of panic in the carbon market as more and more trading houses come up with forecasts of large oversupply.”

Had the climate talks in Copenhagen produced better results, there is little doubt that the European carbon market would be more robust today. However, the failure of world leaders like President Barack Obama, Chinese Premier Wen Jiabao, Indian Prime Minister Manmohan Singh and Brazilian President Luiz Inacio Lula Da Silva to reach an agreement lowered expectations that the EU will tighten its emissions- reduction target before 2015. Last month the EU stopped short of implementing more stringent emissions regulations, citing a lack of sufficient efforts by the U.S. and China.“There’s no impetus for carbon prices to appreciate now unless there’s something unexpected coming from the political or legislative side, like a major agreement between China and the U.S.,” said Nikos Tornikidis, an investment manager at Blackstone Global Ventures in Prague.

At the moment, this does not bode well for the European cap-and-trade system. Nor does it make the imposition of such a system in the United States seem more likely. Even as President Obama has promised to reduce US emissions by 17 percent below 2005 levels, the cap and trade system outlined in the Waxman-Markey bill approved by the House last year, faces much opposition in the Senate, especially from Republicans and Democrats who fear that climate legislation will threaten American jobs. Dirk Forrister, who advised former President Bill Clinton on climate change, was little inspired by Copenhagen and holds only the slightest hopes that the failed climate talks will lead US lawmakers to pass their own cap and trade legislation. “The ugly process was a disappointment,” said Forrister. “There is a glimmer of hope, but it certainly wasn’t the burst of encouragement that the market was looking for.”

Without a strong push from lawmakers—or Obama himself—a cap and trade system stands little chance of being an effective deterrent to pollution. If climate legislation isn’t taken seriously in the United States, then polluters will have little impetus to abide by emissions limits, and the potential carbon market could face problems similar to those plaguing the EU market today.

(image: damonclifford.com)

As the year closes, everyone is taking a look back, so this week’s roundup gives you the best of the “best of” stories.

At MIT Technology Review, Kevin Bullis offers up the top energy stories of the year. Some of the choices were expected—the rush for natural gas in the Marcellus Shale, carbon capture, and biofuel—but hamsters? Follow the links for a video demonstrating hamster power.

Energy analyst Robert Rapier compiled his top-ten list of energy stories this year, which you can find at The Oil Drum or his R-Squared Energy Blog. His choice for top story seems hard to argue with: volatility in the oil markets.

BusinessGreen.com’s James Murray crunched some numbers and found the most popular stories on the site from the past year. You’ll find green investment, solar panels, and lots about hybrid cars.

The Philadelphia Inquirer doesn’t stop at stories of the year—they take a look at the top science stories of the whole decade. The genome, stem cells, and pandemic flu all make the cut, as does one story with more relevance to this site: alternative energy. From peak oil to a post-petroleum world, from natural gas to electric cars, Sandy Bauer covers the highlights.

Ben Jervey at GOOD looks beyond 2009 as well to cover the top environmental news of the last ten years. Follow him as he goes in chronological order, when green became the new black, Al Gore became inconvenient, and Copenhagen was kind of a flop.

Natural gas emits less carbon dioxide than other fossil fuels, but is itself a greenhouse gas. (image: knowledge.allianz.com)

In an opinion piece in the Wall Street Journal, two scientists say that even the most ambitious proposals made at Copenhagen to reduce carbon emissions won’t reverse global warming. So what would they have us do? According to Robert Watson, former chair of the IPCC (Intergovernmental Panel on Climate Change), and Mohamed El-Ashry, senior fellow at the United Nations Foundation, “the most obvious strategy is to make an all-out effort to reduce emissions of methane.”

Methane accounts for 75 percent as much warming as carbon dioxide, say Watson and El-Ashry, but has not received nearly as much attention in any climate protection measures. That’s because methane has a shorter lifespan than carbon dioxide—when released into the atmosphere it lasts decades, while carbon dioxide can persist for hundreds of years. The Kyoto Protocol made methane one of the six gases it targeted, but calculated its effect over the same period of time as carbon dioxide. That distorts methane’s relatively brief but nonetheless powerful impact.

But for Watson and El-Ashry, methane deserves attention not just because of it’s large contribution to global warming but because “relatively cheap ‘end of pipe’ technologies are available to collect methane and convert it to useful energy rather than venting it to the atmosphere.” For example, manure, which releases methane, can be converted into electricity; such programs have already been begun in Colorado and by the firm Green Energy Live.

For advocates of natural gas, Watson and El-Ashry’s proposal puts them in an awkward position. Natural gas emits significantly less carbon than oil, a fact that has made it the darling of fossil fuels for some environmentalists; even the Sierra Club and 350.org founder Bill McKibben have lauded the benefits of natural gas. But if methane is a warming threat on the same level as carbon dioxide, then natural gas—which is primarily methane, and which was the third largest source of methane emissions in the U.S., according to the EPA—doesn’t look any prettier than oil or coal and swapping carbon dioxide for methane is not a tenable solution to climate change.

However, while carbon emitters may breathe a sigh of relief at being out of the crosshairs in at least one op-ed, Watson and El-Ashry also propose a handful of programs to capture methane emissions, and say those measures are more affordable than carbon capture. From their perspective natural gas might still have some advantages, but those advantages are in the ways it is capturable, not clean.

NYT writer Thomas Friedman. (image: treehugger.com)

New York Times columnist and author Thomas Friedman said on Tuesday’s edition of MSNBC’s Rachel Maddow Show that the UN’s climate change conference in Copenhagen was an “unprecedented breakdown” as opposed to an “unprecedented breakthrough” (video below). After all, the end result of the much discussed summit was a non-binding resolution that may not have any impact on carbon emissions, as HeatingOil.com reported on Monday.

But all is not lost, he says; if the United States creates its own climate change policy, and one that successfully launches a “green economy,” the rest of the world will follow suit and will look towards America for leadership. But it will be tough, as nations like China, India and Brazil are gaining in worldwide influence and becoming stronger competitors with the US by the day.

(image: seattlepi.com)

In the wake of the largely-seen-as-failed climate talks in Copenhagen this month, news outlets, analysts, and politicians alike are trying to wrap their heads around what happened in Denmark. Most agree that the talks were a failure, many blaming the process itself. After all, getting 193 countries, all with their own challenges and interests, to agree on anything is a tall order.

Bloomberg columnist Eric Pooley takes it a step further. He points out that all parties going in to this conference knew it wasn’t going to produce a strong agreement, and that fact hinged on one country alone: the United States. Without a firm commitment from the U.S. Senate concerning emissions reduction, few others were willing to lay their cards on the table, and talks suffered because of it. George Monbiot of the U.K. Guardian said as much, perhaps in a more blunt fashion, in his commentary entitled “If you want to know who’s to blame for Copenhagen, look to the U.S. Senate.”

According to Pooley, President Obama knew this going into the Copenhagen talks, having decided to direct his focus on health care instead of climate change. He also believes that Obama needs to mount a “full-scale public education campaign” to educate Americans just exactly what is at stake. He needs to convince his public that addressing climate change will help the economy, not doom it to fail. And after all the preparation that went into Copenhagen, all the hoopla, the posturing, and the protest, “we are where we were: waiting for Obama to lead the charge in the Senate.”

Over at the Wall Street Journal, Nigel Lawson, former U.K. Chancellor of the Exchequer under Margaret Thatcher, calls for a Plan B in dealing with climate change. Lawson first acknowledges that Copenhagen “predictably – achieved precisely nothing.” He attributes the failure to the massive costs associated with decarbonizing the world’s economies. Coal and oil are largely used for one reason: they are cheap. And in the developing world, where hundreds of millions of people are still dealing with extreme poverty, switching from these dirty forms of energy while continuing to industrialize is just not feasible.

Lawson proposes what some might see as a radical approach to climate change, which is abandoning Kyoto, abandoning Copenhagen, and adapting “to whatever changes in temperature may in the future arise.” He argues this will allow us to derive the many benefits of a warmer world while at the same time reducing the costs. Addressing these problems directly as they arise, he says, will be far more cost-effective than our current ideas, and does not require a global agreement. Beyond the idea of adaptation, his plan includes “a relatively modest, increased government investment in technological research and development—in energy, in adaptation and in geoengineering.”

He then points out that it will likely never happen, due to the trauma and deprivation many would feel at having no climate conference to attend.

Opinions continue to abound in every direction over the climate talks. An editorial on FinancialTimes.com calls for a revival of international cooperation, arguing that the U.S. and China, not as ideologically far apart as they might think, can take the lead. The U.K. Guardian even had a positive spin on their political blog, saying that if countries come to Mexico (where the next large-scale international meeting on climate change is scheduled to take place) with a greater sense of realism and a new attitude, Copenhagen “may yet be seen as a useful fresh start.” And the staff over at Politico.com posted a bevy of takes and opinions from various politicians and commentators that range from calling Barack Obama the big winner, to calling the U.N. process limited.

The fallout from Copenhagen will likely keep coming for months, if not years. With all their talk of “action now” and making real progress in Denmark, we still walked away from the table with little to show. Perhaps Copenhagen’s greatest legacy will be in teaching the world how not to get things done. Which, at this point, would be a step in the right direction.

UN Secretary General Ban Ki Moon at the Copenhagen conference. (image: deccanherald.com)

After a long two weeks in Copenhagen, an uneasy accord was reached early Saturday morning, after the official end of the conference. According to the New York Times, the final agreement came in the way of a 12-paragraph statement of intent, not the legally binding pledge many hoped to walk away with. Almost every country was said to have approved the final agreement, even though it was largely seen as a flawed compromise that left many bitterly disappointed.

Among the details missing from the accord were firm targets for emissions reductions and any kind of deadline for enacting a binding treaty. President Obama himself said the accord was only a “modest step” towards real progress. The deal does call for major emitters to curb greenhouse gases and help developing nations with much-needed aid. However, since it is non-binding, there is no telling how effective the pledge will be.

The process of tackling global warming using the U.N. Framework Convention on Climate Change, recently seen to be the best way of handling the problem, seems to be falling apart. As seen in Copenhagen, it is increasingly difficult to reach a global consensus when so much bad blood and hostility exists between rich and poor nations. As the world moves forward, it may be time to try a new tactic.

For much of the world, the outcome of the Copenhagen talks was disappointing. However, if and when a deal is reached in the future, it will largely be due to the hard work that was done in Denmark. Here’s hoping next time is more fruitful.