The carbon market has come back to bite the Government in the bum.
As part of their fiscal update this week we've seen that the last carbon auction produced nothing and cost the Government $1.2 billion, which simply adds to their ever-growing deficit.
I asked at the time whether this was bad news. They told us it was the market working as markets do.
The trouble with the answer was, although technically that is true, it was in fact a direct reaction, or reflection, of the lack of faith in the Government's climate change polices.
I note the lawyers for Climate Action are taking James Shaw to court to seek a judicial review around the Government's decision not to follow the Climate Commission's recommendation that would allow the carbon price to rise.
You have a number of competing factors here. On one hand the commission wants to send us all broke because they are obsessed with carbon emissions. You have a Government that can't live with their zealousness because they actually want to get re-elected.
But, you also have a Government that has made climate their nuclear moment and are now being caught out as being fraudulent when it comes to delivery on the rhetoric.
Somewhere in the middle is the carbon market, which is an invented rort, designed to raise money from polluters who are forced to offset their emissions by buying credits, with the money raised goes to climate positive projects.
Trouble is when the auction is held. The question is asked - why would I spend money on something I don't believe is going to come to pass?
So they don’t.
Hence the auction fails, nothing is sold and all those credits get shifted to the next auction. So that means double supply, but how much demand?
My guess is the court case will fail, based on the simple premise that Governments are the ultimate court and can do what they like.
The carbon market is a mess because the Government are a mess. The Climate Commission look increasingly out of touch and radical, offering up theories no one is taking up
And slowly but surely, the reality of crazy ideas invented to address issues that don’t have full buy in are exposed for all to see.
A failed auction, a court case and over a billion dollar not realised.
What a shambles.
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