Global market for carbon permit trading 'has stalled'

THE World Bank has revealed the global market for trading in carbon permits has stalled.

THE World Bank has revealed the global market for trading in carbon permits has stalled, just weeks out from the federal government's release of its detailed plans to shift to an emissions trading scheme.

But while the opposition and miners demanded Julia Gillard slam the brakes on her carbon pricing plans in light of the latest World Bank review of the international carbon market, the Prime Minister's climate change adviser Ross Garnaut urged her to press on with her reforms.

"This should be the best of times for structural change in Australia," he told a policy forum yesterday.

The World Bank report found that after five consecutive years of robust growth, the total value of the global carbon market had stalled at $142 billion last year, despite a continued rise in emissions.

The value of the primary Clean Development Mechanism market fell by double digits for the third year in a row, ending lower than it was in 2005, the first year of the Kyoto Protocol.

It also remained dominated by Europe, which accounts for 97 per cent of total trades, defying efforts to make the market a truly global affair.

Opposition climate action spokesman Greg Hunt yesterday said the level of volatility in carbon markets in Europe and America was of concern. "I think the government must explain how a market which can be changed at the whim of international players will provide certainty," he said.

Ms Gillard has urged business to back her reforms, arguing a policy vacuum on Australia's climate change response was more dangerous to investment than a long-term plan to price carbon.

The World Bank called 2010 the year of lost political opportunities on climate change policies, citing the collapse of Australia's Carbon Pollution Reduction Scheme after it was blocked in parliament as one example.

Others included the US's inability to pass federal cap-and-trade legislation and the stalling of the Basic Act on Global Warming when the Japanese government lost control of its upper house.

A Minerals Council of Australia spokesman said the World Bank review confirmed that international action on pricing carbon had "all but stalled".

"It confirms that Australia will be introducing the most aggressive carbon tax in the world for no environmental gain," he said.

But a spokeswoman for Climate Change Minister Greg Combet said 32 countries and a number of US states already had emissions trading schemes, with Japan and South Africa also considering introducing one.

She said the value of global carbon markets in 2010 had declined only slightly after years of increase, up from about US$60bn in 2007 to US$142bn in 2010.

And she attributed part of the 1.4 per cent decline from 2009 to 2010 to the lingering effects of recession in Europe and uncertainty about Australia's own intentions on a carbon price.

Professor Garnaut, who this week released his recommendations on a carbon price, acknowledged the political dangers of introducing one but said there was no economic reason to hold back. "The carbon pricing proposals that I've put forward will not cost any manufacturing jobs."