26 Jul 2012

Price of polluting falls as carbon credits get cheaper

8:30 pm on 26 July 2012

The price of carbon has slipped to new lows on world markets, hampering efforts in New Zealand and overseas to improve the environment.

Emissions of carbon dioxide and other greenhouse gases have to be paid for by industries in many countries, but the cost of doing so has fallen to record lows and that makes it relatively cheap for companies to carry on polluting.

It used to cost polluting companies about $40 for each tonne of carbon dioxide and other greenhouse gases they emit.

That price has now fallen to around $5, thanks to the global financial crisis, the sovereign debt crisis and other economic woes.

Lizzie Chambers, who runs online carbon trading company Carbon Match, thinks the purpose of the emissions scheme risks being thwarted.

She says when the company launched a year ago the first trade was $20.30 but this week it has had prices of $5.15 for a carbon credit.

"That provides very little incentive for new carbon forestry. It also turns off existing foresters from looking to sell those credits."

David Rhodes of the Forest Owners Association says the low price of carbon is deterring forestry owners from planting new trees, which could absorb carbon dioxide.

He says to assist forestry here, the Government should restrict the inflow of carbon credits which have been cheapened by Europe's economic battering.

However, that was specifically ruled out by the Government earlier this year.

The European Commission has moved to reduce the issue of new carbon credits to mop up the three billion unsold credits floating around in the market.

So far, that has failed to stem the slide in prices.