Market for carbon permits not warming

I'm seeing a lot of spin out there from environmental advocates and supporters of U.S. President Barack Obama about last weekend's climate-change denouement in Copenhagen. The gist of their argument is that the summit may not have been a smash success, but it was the beginning of a process that will lead to good things down the road.

I don't agree with this view -- I'm much more sympathetic to Michael Levi's realization that "the United Nations climate negotiations will never quite work" -- but I do respect those who hold it.

That said, here's one indication that Copenhagen was a huge disaster: As noted in today's Morning Brief, carbon prices took a major dive yesterday.

Prices for carbon permits for December 2010 delivery, the benchmark contract for pricing European permits, dropped nearly 10 per cent in early trading, before recovering to end the day 8.3 per cent lower at €12.41.

One dealer described the market as like “a falling knife” but said that a rise in European gas prices had helped to support the carbon market.

UN-backed certified emissions reductions for December 2010 delivery fell 7.9 per cent to a low of €10.89 a tonne, a six-month low.




Hopenhagen, RIP

Cannes, France, home of the renowned international film festival, was also where was launched, improbably, the slogan “Hopenhagen.”

"Hopenhagen," as many people may not realize, was not a grassroots slogan, but originated with an ad campaign promoted by the U.N. body charged with tackling climate change. Last summer, U.N. Secretary-General Ban Ki-Moon paid a visit to the French resort town to launch the new brand. Joining hands with executives of the International Advertising Association, he announced a massive global advertising campaign, with an unlikely group of partners, from Coca-Cola to Siemans to BMW to DuPont, all donating services and incorporating the slogan into their own green-themed (some would say green-washing) advertising.

The idea, as Ban Ki-Moon said at the time of the launch in June, was to galvanize an international grassroots movement: "We need a global movement that mobilizes real change." The impulse was understandable. For almost two decades, U.N.-backed efforts to forge global consensus on addressing climate had been floundering. Moreover, it has been hard for scientists and politicians to tell an engaging narrative about climate. By enlisting such all-star international spin-doctors as Ogilvy & Mather, Colle + McVoy, and Ketchum, Inc., the United Nations set out about to tell a better story. The underlying assumption was made that if enough people cared, governments of the world would act. Unfortunately, international negotiations have never worked like that.

It's now painfully clear now that although the packaging was masterful, the product wasn't there. The United Nations ought to have exerted much more effort ensuring that key countries such as China and the United States had adequately laid the groundwork for a meaningful agreement before the conference in Copenhagen began. The main points of contention (on financing; monitoring and verification; etc), after all, were known months in advance. When top officials in the United States and China announced domestic targets one day apart in late November, some took that as a sign of coordination behind the scenes. But it now seems that at Copenhagen itself, world leaders were largely winging it, with successive drafts leaked to the press throughout, and Obama in his concluding remarks saying he wasn't sure whether the kind of non-binding agreement at last reached actually required signatures from developing nations -- someone else better check the technicalities. Huh? He's not sure.

There is another lesson. That is that the U.N.-affiliated bodies are better at certain things than others. Clearly the "Hopenhagen" messaging campaign was a sleeper hit of sorts -- not at driving the political decision-making process, but at finding its way into t-shirt designs, protesters' chants, and online petition drives. Meanwhile U.N. affiliates such as the World Health Organization and certain programs under UNESCO are fairly effective at gathering and distributing  information and funding, after a political consensus has already been established (i.e., disease is bad; child mortality is bad). Yet the U.N. Security Council itself is largely dysfunctional. Alas, the United Nations has never worked smoothly as a forum for resolving multi-faceted and contentious international political disputes. (Savvy commentators like Council on Foreign Relations' Michael A. Levi are now examining alternative venues for moving climate talks forward.)

Perhaps the media should have done more to check the rising tide of expectations laid on Copenhagen? But newspaper editors generally took a great deal of interest in climate negotiations, believing that it was their responsibility to shine a bright light on the issue of global warming. Months in advance of Copenhagen, absent sturdy evaluations of what treaty negotiations might yield, major U.S. newspapers made the decision to deploy resources to treat it as a huge story -- ergo it became one. Hundreds of reporters were dispatched; graphics departments pulled out all the stops; previews and special issues were designed. Although individual reporters, such as the New York Times' Andy Revkin, sounded notes of caution in their articles, the overall cacauphony gave the impression that something tremendous was about to happen. The Copenhagen summit in 2009 was covered, in a sense, much like the Beijing Olympics in 2008. Even when there wasn't much news to report, readers were treated to non-news from Copenhagen, about a shortage of limos for diplomats, for instance, or protesters' most outrageous attire.

All this attention raised expectations, but didn't deliver results. Unfortunately, the collective desire to see change happen didn't make it so. Let's just hope the feeling of disappointment won't lead to a backlash against future climate change campaigns, or sink the chances of passing a cap-and-trade bill in the U.S. Senate.