Climate Change: Failed again

In what has become regular news, the quarterly ETS auction has failed, with nobody even bothering to bid. The immediate reason is that the carbon price has fallen to around $60, below the auction minimum of $68. And the cause of that is a government which has basically given up on climate change, repealing all useful policy, setting laughably low targets, while making louder and louder noises about refusing to meet our Paris commitments - or even withdrawing entirely. Not to mention refusing to address the fundamental oversupply issues which have undermined the ETS.

Basically, with this government, ETS participants have no confidence that the system will work properly in the future, or even that it will exist in the future. Which naturally affects how much they're willing to pay. The good news is that they're burning some of the stockpile of excess units. But long-term, this lack of confidence in the system is going to be a killer.

As for the auction. 1.5 million tons of unsold units now go into the pile for future auctions. And if they continue to be unsold by the end of the year, they'll simply be cancelled, removing them from the system forever. Which isn't a terrible outcome. But the long-term collapse of the system probably is.