Hasn’t the price of carbon been really low recently? How do I know it won’t crash again?

The EU carbon market began with a trial phase in 2005. Unfortunately the good but severly underresourced people in Brussels were reliant on Member States to decide how many permits they wanted to hand out to companies. Inevitably every country tried to protect their industry from too much cost, so everyone handed out far too many permits. The result was that there was a big oversupply in the market at the end of the trading period which was the end of 2007. Prices crashed to close to zero.

The current phase is from Jan 2008 to Dec 2012 – allocations have generally been a lot less generous – though still pretty unambitious in our opinion. We can’t guarantee there won’t be another crash but the fact that you can bank permits into future periods means they will always have a value and so prices should remain positive.

Decisions about what level of permits to hand out after 2012 are currently being debated in Europe and will be decided over the next couple of years. Sandbag will campaign to make sure the right decisions get taken. So, Sandbag isn’t just about buying permits it’s about campaigning to ensure there are no more price crashes and the emissions trading market really does start working for the environment.