The cost of carbon credits has halved in seven months and environmental experts fear the price drop could jeopardise attempts to avert climate change.
Last week, carbon credits fell to under $7 per tonne, less than one third of the $25 maximum level as decreed by the Government.
Adrian Macey, a former greenhouse gas negotiator turned academic, says expensive carbon is supposed to deter companies from emitting greenhouse gases, but a low price means firms might find it cheaper to keep emitting than to reorganise factories.
"If the very low prices are sustained, then it makes it much more difficult for emissions trading systems to have any real bite into emissions."
The Forest Owners Association says the low value of carbon credits mean there is little incentive to plant trees that absorb carbon dioxide.
