Last week it was Reuters's "Frustrated carbon traders try other commodities".
Here's BreakingViews via the Financial Post:
Investment banks had high hopes for carbon trading. Point Carbon, an energy consultancy, predicted in 2008 that the market for trading carbon emissions permits would reach 2 trillion euros by 2020. However, the failure of the Copenhagen summit has dashed hopes of a global market. National schemes could help fill the gap, but political negotiations in the first half of 2010 will be crucial.
Carbon trading is minuscule when compared with other energy markets. Permits with a value of around $150 billion changed hands in 2009. This generated revenues of just $850 million for investment banks, according to Societe Generale analyst Emmanuel Fages. That's the equivalent of just a few hours' trading in the oil markets. The bulk of these revenues came from hedging price and volume risk associated with projects to offset carbon emissions, with the remainder from low-margin trading.
The Copenhagen summit failed to put in place a global scheme to trade emissions permits, replacing the Kyoto protocol, which expires by 2013. But local markets could make up some of the shortfall. The U.S. market, which Fages estimates could be worth $1.3 trillion by 2020, is the most important. The U.S. Senate is debating a scheme, but the original deadline for launching a federal market in 2012 may slip if a bill is not passed before mid-term elections in November.
Kevin Rudd, Australia's prime minister, will put a carbon bill to the country's Senate for a third time in February and may call an election if it is rejected. In Japan, prime minister Yukio Hatoyama wants to introduce a mandatory emissions target, against fierce industry opposition.
Investment banks had hoped to take advantage of climate change by originating, financing and hedging carbon reduction schemes as well as trading permits and credits.
However, to date it remains a niche business. Barcap, the biggest player, employs just four people on its trading desk. Some banks, including Credit Suisse and UBS AG, have withdrawn from the market. If individual countries don't act soon then carbon trading will remain a sideshow for the foreseeable future....