Carbon-Permit Slide Reflects Copenhagen Disappointment

By KEITH JOHNSON
The failure of the United Nations climate summit in Copenhagen to produce a strong, binding agreement to cut carbon-dioxide emissions sowed gloom in European carbon markets Monday, with prices for carbon-emissions permits falling more than 8%.
There were also political echoes to the Copenhagen summit's acrimonious conclusion. Some senior officials, including British Prime Minister Gordon Brown and British climate-change secretary Ed Miliband, criticized the current U.N. framework for addressing climate change, which requires consensus among more than 190 countries.

"Never again should we face the deadlock that threatened to pull down those talks," Mr. Brown said Monday. "Never again should we let a global deal to move towards a greener future be held to ransom by only a handful of countries."
The slumping price for carbon reflected disappointment among traders and businesses that the nonbinding Copenhagen Accord didn't stipulate how much big countries such as the U.S. or China have to reduce their emissions of greenhouse gases. The deal also left unresolved most of the big issues of how to curb emissions linked to climate change. On Tuesday, China's Xinhua news agency quoted Foreign Ministry spokeswoman Jiang Yu, taking issue with British complaints about the summit and China's role.
Ms. Jiang said China urged developed countries to "fulfill their obligations to developing countries in an earnest way, and stay away from activities that hinder the international community's cooperation in coping with climate change."
Because the U.S., China and other major economies didn't agree to binding emissions cuts, European countries didn't increase their own pledges to reduce greenhouse-gas emissions. European officials, who had considered curbing emissions by 30% from 1990 levels, instead maintained their target of a 20% reduction from 1990 levels by 2020.
That helped push prices for carbon permits to €12.41 ($17.73) per metric ton Monday, down from €13.58 Friday. Carbon-permit prices have fallen 14% since the beginning of the Copenhagen conference, a reflection of how expectations steadily fell as countries bickered over how much they would cut emissions and who would pay for it.
The European Union's emissions-trading plan caps the amount of greenhouse gases that power companies and the like can emit. They can purchase carbon permits on the market in order to comply with emissions limits.
Investors in low-carbon or no-carbon energy technology, such as solar panels, wind turbines and nuclear power, say the prices for carbon permits must be much higher than current levels -- in some cases, as much as €60 a ton -- to make their systems cost-competitive with coal, oil or natural gas.
The two-week Copenhagen conference appeared set to end with no agreement at all, until last-minute bargaining among leaders from the U.S., China, Brazil, India and South Africa produced a final statement. A handful of countries, including Sudan, Venezuela and Bolivia, declined to endorse the 11th-hour deal.
Many analysts said the problems evidenced in Copenhagen could spell the decline of the U.N. approach to tackling climate change, which has been in operation since 1992 and has prioritized global accord. Instead, they expect the rise of international climate negotiations among smaller groups of countries.
"The end game in Copenhagen was symbolic of the conference's broader procedural failings," says Michael Levi, director of energy security and climate change at the Council on Foreign Relations in New York.
Write to Keith Johnson at keith.johnson@wsj.com