If you hadn’t heard, the carbon-trading market tanked the other day. Economists are not sure if it did so because industries were able to limit emissions better than anticipated, or because the limits on emissions were too lenient and the industries just didn’t need to buy many carbon credits:

“But the latest figures … revealed that 21 of the 25 member states produced 2.5% less CO2 in 2005 than participants had forecast.”

It looks to me like companies are finding ways to limit CO2 without having to buy carbon credits. You would think economists could have predicted this. It will get harder to reduce CO2 as time goes by, as the easy, inexpensive ideas (like conservation) run out. What they will probably do next is make the restrictions too severe instead of too lax, because it will be harder and harder to limit CO2 now that the low-hanging fruit has been picked.

In any case, a lot of people who borrowed millions to create things like tree farms to sell carbon credits to European industries are now looking for a way to avoid bankruptcy. It is anticipated that the market will bounce back once adjustments are made for allowable emissions — or so say the same economists who couldn’t predict this would happen. The idea isn’t dead yet and I hope it bounces back soon.

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