Just weeks after hitting a record high of US$37/ton, the price of Carbon crashed to around US$10/ton on the European market. The reason?
Emission reports from the Netherlands, Czech Republic, France and Walloon region of Belgium came in at lower than expected rates for 2005. The demand for carbon credits depends on the actual levels of GHG emissions of various countries compared to their targets. If the countries achieve higher level of emission reductions than their targets, then the companies in those countries need not buy additional carbon credits. If they emit higher levels they have to buy additional carbon credits in their own country and in developing countries to meet their reduction targets.
Greater awareness of emission targets and the heavy cost for non-compliance may dampen demand for carbon credits.
Still, at US10/ton, farmers stand to make a hefty margin on carbon farming and sequestration.
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