So how well is carbon trading working, anyway?

It's hard for me to ignore a headline like this: "Climate deal uncertainty clouds carbon market -- survey." According to a Reuters story, a poll of companies around the world with an interest in trading permits to emit greenhouse gases finds that "over half of respondents expect a major climate pact to be postponed until further meetings in 2010." The Greenhouse Gas Market Sentiment survey was released by the International Emissions Trading Association just before today's opening of the latest round of negotiations leading up to December's Copenhagen conference, at which we'll see if a climate pact will actually be dead on arrival.

Word heading into the Bonn talks doesn't offer much hope yet.

Over 120 pages of draft texts indicate deadlock between rich and poor nations on a core dispute over how to share out curbs on greenhouse gases, released mainly by use of fossil fuels.

To avoid that standoff, finance could be an area to build confidence.

"One thing that can usefully be done is finance -- working out how funds can be mobilized for developing nations would be a huge positive influence on the negotiations," Yvo de Boer, head of the U.N. Climate Change Secretariat, told Reuters.

"If there's no movement on emissions then maybe an agreement can be made on finance," he said.

One could argue that if there's no movement on emissions, we'll what's the point? One of the reasons the IETA survey's respondents are so pessimistic might be that the world's existing carbon trading schemes aren't exactly going gangbusters. For example, while the value of the emissions permits has risen, it's important to keep one's eyes on the ultimate goal -- cutting emissions.

"More than one billion (tonnes) were traded on various exchanges and platforms ... representing the largest growth rate of all segments in the carbon market with more than a 350 percent increase in traded volumes and values," the World Bank said. "These trades do not directly give rise to emission reductions unlike transactions in the primary market."

The so-called primary market, or the actual emissions cuts made and sold by United Nations-registered clean energy projects in developing countries, fell by 30 percent to 389 million tonnes. This segment was worth $6.5 billion last year, down from $7.4 billion in 2007. (Reuters, May 27, 2009)

Those 389 million tonnes involve carbon dioxide, which works out to a little over 100 million tonnes of carbon. Once could argue that those kind of numbers aren't too terrible. But it's only a start. Global emissions of carbon are in the neighborhood of 10 billion tonnes annually, so the we've managed to make a dent of just 1 percent. And this is the kind of thing that backers of Waxman-Markey are counting on to bring our emissions down.

World Bank analysts say the weak results so far are in large part a result a "lack of clear policy and price signals." So I guess we'll have to hope that 1) Congress can pass Waxman-Markey; 2) that negotiators defy expectations and reach a deal in Copenhagen; and 3) that those developments are enough to spur real market confidence. Good thing we've got a president who's all about the hope thing.