C02 emissions: US losing business in Europe

United States is losing business in Europe because of failure to respond to climate change. US and China are the largest emitters of carbon and they have an enormous responsibility to participate in emissions trading, Bart Chilton, Commissioner of Commodities Futures Trading Commission (CFTC)said.

Speaking at the Finance IQ, Second Carbon Trading Conference, New York, New York on Wednesday, he said that , it is past time for the United States to pick up the slack and start getting serious about climate change.

“In fact, the biggest increase in the Chicago Climate Exchange carbon market took place after Super Tuesday, February 5th. That is the date when 24 states had political contests—with 52% of all pledged Democratic Party delegates and 41% of the total Republican Party delegates at stake. That is the date when the field of presidential contenders shrank to three viable candidates,” Bart Chilton said.

All three, Senators Clinton, Obama and McCain, support a mandatory cap and trade system. Within a short period of time thereafter, prices for the Carbon Financial Instrument traded on the Chicago Climate Exchange moved from the $2.50-$3.00 range to over $7.00.

“Ensuring honest emission markets, for both futures and options contracts, would be the responsibility of the CFTC. We would perform the same types of oversight functions that we currently perform to guard against fraud, abuse and manipulation. We would work to ensure that these emission markets are viable tools for hedgers and for speculators,” Chilton added.

Despite the phenomenal growth in market for carbon emissions since 1990’s the United States, world’s historically largest emitter has only initiated certain voluntary carbon markets and has sat on the sidelines and not truly tapped into its massive potential to participate in this space, Chilton said.

“We all know that the global market for carbon emissions has grown precipitously since its origins in the 1990’s, and particularly in the last few years. In 2002, the World Bank estimated the volume of carbon emissions traded globally at 32 million metric tons with a value of approximately $100 million. For 2008, these values are estimated to increase to a volume of 4.2 billion metric tons, and a total value of $92 billion,” he said.

What does all that mean? It means that the market value of global carbon trades has experienced an average annual growth rate of about 312% since 2002! That is a cumulative increase of 92,000 percent! That’s not conjecture, it is a hard number fact that this trading has gone from $100 million to $92 billion. As important is the fact that what we are seeing is a policy value shift – a change in priorities for the world which is reflective of the seriousness of this issue, Chilton added.

It is unacceptable that China, the second-largest economy in the world, is not stepping up and participating in this global challenge, he commented.