European Union

EU Parliament Rejects Carbon Market

Would have removed surplus of emissions permits

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The European Union Parliament rejected a proposal to backload the auctioning of credits within its Emissions Trading Scheme this week. The proposed "backloading" plan would have removed a surplus of emissions permits from the world's largest carbon market—potentially saving it from collapse and making fossil fuels more expensive for utilities and factories to burn. The surplus, partly a result of the recession, had driven carbon prices down from 25 euros in 2008 to just 5 euros per ton in February. As a result, the permits were no longer doing their intended job of encouraging manufacturers and utilities to invest in cleaner fuels and new technology. Announcement of the ruling sent permit prices to their lowest yet and dealt a blow to partner Australia. The country intends to link to the EU carbon market in 2015.