Recession Benefit: It’s Cheaper To Pollute!

From the FT’s Alphaville:

The below chart, from the European Climate Exchange  (via Hellasious at Sudden Debt), shows…[that] the price of EU-traded futures on carbon dioxide emissions… have collapsed.

While in the short term this is a good thing – lower futures prices imply fewer permits in demand which implies in turn that fewer companies are producing C02 over their emission caps – in the long term, it’s a setback: With contracts so cheap, companies are disincentivised to reform their businesses. An emission cap-based system thus becomes relatively redundant as a tool for incentivising reform through a market mechanism.