Looking for a Commodity That's Rising? Try Pollution Permits

Daily Herald (Arlington Heights, IL), August 31, 2015 | Go to article overview

Looking for a Commodity That's Rising? Try Pollution Permits


Byline: Alessandro Vitelli Bloomberg News

There's one corner of the commodities markets bucking the slump that's sent raw material prices tumbling: pollution permits.

Prices in Europe's market for carbon emission allowances, where companies trade the right to release the greenhouse gas into the atmosphere, gained 10 percent this year after the European Commission took unprecedented steps to prop up the market, attempting to curb a record glut.

The regulator's supply squeeze will help carbon gain another 11 percent by the end of December, according to consultants Energy Aspects Ltd. and Vertis Environmental Finance. Compare that with crude's 30 percent slump since its June peak and Citigroup Inc.'s forecast of a further 30 percent drop. Or ABN Amro Bank NV's bearish forecast for gold, predicting a 29 percent slump by the end of next year.

There's a key difference, of course. Unlike other commodities, supply in the $53 billion market is created by lawmakers. The Commission issues or sells permits to about 12,000 factories and power stations, which must surrender allowances matching their pollution each year. The 10-year-old system forms part of Europe's response to the threat of global warming.

"It is an explicit aim of European Commission to see higher carbon prices," Bernadett Papp, an analyst at Vertis in Budapest, said Monday by phone. "This is an artificial market created by politicians, not a normal commodity market like oil."

As prices from copper to gasoline plunge on lower demand from China, the biggest user of raw materials, carbon allowances outside Europe are also gaining. New Zealand carbon contracts advanced 5.5 percent this year and permits in the Regional Greenhouse Gas Initiative, a nine-state trading system in the northeastern U.S., rose 14 percent.

More regional markets may be on their way. President Barack Obama's Aug. 3 Clean Power Plan gives U.S. states the option to set up their own markets to cut emissions. China may start a national trading program in 2016.

"With stronger environmental commitments around the world, the EU emissions trading system will catch attention," Milan Hudak, former chief energy analyst in Prague at Virtuse Energy Sp zoo, said by email Aug. 28. "This will bring more new long term speculative players who will be willing to withstand short- term gyrations, while price rises will attract also small to medium-size investors. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Looking for a Commodity That's Rising? Try Pollution Permits
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.