Climate Change: The auction fails again!

There was another ETS auction this morning, and like the other two this year, it failed to clear, with no bids above the confidential reserve. Which means another 4.475 million tons of carbon go into the pile for the next auction - and if that one fails, it all disappears, effectively taking 26 23 million tons of carbon - a third of a year's emissions - out of the system forever. Which is a result we should all be hoping for.

As for why, I think that after two failed auctions, there's just too much volume. There were bids for only 57% of the units on offer. Which means that if the bottom bid is below the reserve, nobody gets anything - and the government gets no money. There's now a billion dollar hole in the government's finances. Which ought to give the status quo parties promising to fund tax cuts or other spending with ETS revenue pause for thought.

Meanwhile, congratulations to whoever put in today's low bid - you've done the planet a service. Please do it again in December, and help wipe 26 23 million tons out of the system.

Correction: The December auction volume has been lowered, so the total amount at stake this year is 23 million tons.