By Jeff St. John
It looks like the last-minute, non-binding carbon emissions agreement coming out of Copenhagen isn't living up to carbon traders' expectations.
That's the reaction from Europe, which saw the price of carbon-emission permits fall nearly 10 percent on Monday, reports the Wall Street Journal.
To blame is the weak agreement coming out of the two-week United Nations summit on global warming, analysts and traders say. While top emitters China and the United States did ink a deal with emerging economies such as Brazil and India, it lacked any legally binding limits on how much greenhouse gas they can pump into the atmosphere.
What's worse, the conference failed to reach an agreement on continuing the clean development mechanism, the process created by the Kyoto Protocol to allow developing nations to plant trees, cut pollution and take other steps to offset carbon emissions from wealthier emitters. The existing agreement runs through 2012, the Financial Times reports.
The weaker-than-hoped for results of the Copenhagen meeting could put to the test the proposition that corporate and consumer interests, rather than government regulations, will drive the adoption of carbon management technologies and support services.
After all, utilities dependent on coal-fired power and corporate giants such as Wal-Mart (NYSE:WMT) and Coca-Cola (NYSE:KO) alike have been seeking clearer guidelines on how much reducing carbon will cost them.
In the meantime, national mandates will have to fill the gap. In the United States, Congress is waiting until spring to restart the debate over a national carbon emission reduction scheme.