The price of carbon in the European emissions trading market – the world-leading scheme that will link with the Australian scheme in 2015 – has collapsed after a key vote to shore up the scheme failed overnight.
European Union parliamentarians voted 334 to 315 to reject a short-term fix to the trading scheme’s woes caused by a surplus of emissions permits, putting into doubt the future of the scheme.
The vote triggered a 40 per cent crash in the carbon price to around $A3.20 per tonne, before rebounding slightly by the close of trading.
By comparison, Australia’s carbon price is fixed at $23 a tonne, and will rise over the next two years.
If it survives, Australia will link with the European carbon market in 2015, allowing local companies to buy European permits to cover some of their emissions.
Bloomberg New Energy Finance analyst Konrad Hanschmidt said the low carbon price in Europe could enable Australian companies covered by the domestic carbon price scheme to cut their carbon bill.
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