Carbon credits hit new low

UN carbon credits have hit a new all time low as the debt crisis gripping the EU drags down the value of carbon, which reached 7.13 Euros a tonne last Friday.

The problem has been compounded by the UN issuing new permits in an already over-supplied market. The idea of the scheme is to use the money generated from selling the credits to aid projects in developing countries. The over-supply however, has led to a crisis of confidence.

The idea of carbon credits is to drive climate friendly, carbon reducing strategies through use of the market mechanism. The artificial input of too many credits has damaged this process however, leading to a low and largely ineffective valuation of carbon in the atmosphere.

One trader told Reuters, “From a logical point of view, Carbon Emissions Reductions (CER’s) are close to marginal cost and selling would not make sense unless you are monetizing some of your portfolio, however the current economic woes facing Europe continue to grow and macro fundamentals are taking over," he added.

CER’s have lost 40 percent of their value this year mainly due to the economy and the massive 254 million CER’s issued this year, more than double the amount from 2 years ago. It is thought that the value could slide further in the coming weeks.