The European Union’s 54 billion- euro ($71 billion) cap-and-trade system may be undermined if the bloc’s Parliament votes against Climate Commissioner Connie Hedegaard’s temporary rescue plan tomorrow.
The strategy, known as backloading, would delay the issuing of some new permits under the EU emissions trading system, or ETS, which imposes pollution limits on about 12,000 power plants and factories across the region. The euro area’s recession has cut demand, exacerbating a glut that drove prices in the world’s biggest greenhouse-gas market to a record low in January.
Hedegaard says the low cost of the allowances erodes the incentive for polluters to invest in climate protection technology. Opponents including the government of Poland, which is Europe’s third-biggest carbon emitter, and BASF SE, the world’s largest chemicals maker, say the plan will raise energy costs, manipulate prices and undermine investors’ confidence.
“It’s possible to be serious about climate and the environment and not harm your economy,” Hedegaard said in a March 27 interview in Brussels. “I would have told you half a year ago backloading is a no-brainer, everybody will understand that you can’t continue to overflood a market that is already overflooded. Now this has become extremely political.”
Click here to read the full story.
