Carbon trading 'undermined by boom and bust'

Terry Macalister and Ashley Seager
The Guardian, Monday 23 March 2009

A shake-up in the way the "boom and bust" carbon markets are working in Europe is being urged ahead of tomorrow's auction of new emission certificates by the UK government.
The Carbon Trust, which is sponsored by government money, and the consultancy PricewaterhouseCoopers argue that controls might have to be put in place to prevent the EU's emissions trading scheme (ETS) being discredited by a further collapse in prices, which have already slumped from €30 per tonne to just over €10.
As ministers prepare to raise money by selling off more carbon certificates to polluting companies, Richard Gledhill, PwC's global climate change leader, said that volatility and low carbon prices were undermining the business case for long-term investment in emissions reductions.
He added that a mixture of cap-and-trade schemes such as the ETS plus a carbon tax could be the way forward because "business needs clear, long-term price signals if major shifts in private sector investment are to be made".
PwC points to estimates that the world needs to spend about $500bn a year over the next 20 years on renewable energies and energy efficiency alone, many times the current level, which is in any case dropping back because of the seizing-up of capital markets.