Carbon futures price up ahead of Copenhagen

Market speculators are buying up carbon futures ahead of the Copenhagen climate talks in the expectation any emissions accord will drive their values up.

For once, the spike in valuations for carbon, or 'hot air' as it is known on trading floors, stands at $21.10 a ton and it is welcomed. A steady increase in prices has helped to calm fears that a massive over-supply in carbon credits from countries across central and eastern Europe could ultimately depress prices so far that the cap-and-trade system could itself crumble.

But with the pre-Copenhagen political positioning in full swing, the issue of carbon credits is coming to the fore.

Is it, as critics likes the scientist James Hansen suggest, no more than a way for wealthy countries to assuage their guilt about over-consumption and atmospheric pollution by investing in forest preservation programmes without any real direction or co-ordination?

Just as a holiday-maker might buy an inexpensive carbon offset voucher to counterbalance the pollution created by the trip, there is concern that on a national level carbon credits have no effect in changing behaviours.

"The carbon offset has become this magic pill, a kind of get-out-of-jail-free card," Justin Francis, the managing director of Responsible Travel, told the New York Times. "It's seductive to the consumer who says, 'It's $4 and I’m carbon-neutral, so I can fly all I want'."

Furthermore, developing countries like Brazil and Indonesia, with significant tracts of the world's remaining tropical forest, fear that the cap-and-trade system will ultimately become a tool for wealthy nations to determine how they develop their resources.

In Copenhagen, Brazil will propose a scheme limiting rich nations to 10 per cent of their emissions cuts through the purchase of forest carbon offsets. Otherwise, developing nations say, rich nations will buy carbon credits at the expense of slowing or making their own carbon cuts.

According to the UN, 147m tons of the credits have been sold worldwide under the Kyoto Protocol. Former Eastern bloc countries have billions of tons to sell because their factory output (and pollution) has reduced since 1989. And, of course, carbon credits have become an area of significant corruption. So what's keeping this strange game going?

According to the New York Times, just reputation: no European country wants to be seen as buying 'hot air' that does little to reduce emissions, experts say. ·