Recessions and carbon markets

The current recession brought with it a slow down in industrial production, and that has translated into far fewer greenhouse gas emissions in 2009 than in previous years.

...

A more immediate question is how the downturn will affect the price of permits representing tons of carbon dioxide traded on markets like the European Climate Exchange in London and BlueNext in Paris.

A decline in emissions greater than forecast could mean even more surplus permits trading on those markets, driving the price of permits even lower than is already the case. (European permits have been trading around 13 euros for the past few months).

A decline in emissions lower than forecast would still mean large numbers of surplus permits on the market, but that could lift prices somewhat.

via greeninc.blogs.nytimes.com