The European Union’s failing carbon market has been thrown a lifeline by the European Parliament’s Environment Committee. It has backed the Commission’s plan to prop up the price of a tonne of carbon by withdrawing an oversupply of credits from the market.
Carbon trading is one of the major EU policies designed to combat climate change. But a combination of successful lobbying by industry bodies, political interference and lack of economic growth has brought the scheme close to collapse, so that it is now cheaper to pollute the atmosphere than to invest in becoming energy-efficient.
The original idea of the EU emissions trading system (or scheme), the ETS, was to set a maximum cap on carbon emissions from each factory or power station. This would force industry to become more efficient or to pay a high price for every extra tonne of carbon over the limit.
Industries would gain credits for reducing their emissions below the set limit and then sell them on the open market to polluters who had failed to act. The whole system depended on the price of the units of carbon being high enough to give polluters an incentive to reduce their emissions.
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