From the FT’s Alphaville:
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.
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