The Wall Street Journal reports Emissions trading in Europe in Tatters.
The European Union's flagship program to fight global warming-a regional carbon-emissions trading system-suffered a major blow Tuesday when legislators rejected a proposal aimed at saving the market from collapse.
After the European Parliament's rejection, spooked investors drove the already depressed price of carbon emission permits down by nearly half. Benchmark electricity prices also fell. Europe's Emissions Trading System, launched in 2008, was intended to protect the environment by raising the cost of polluting and encouraging businesses to invest in cleaner technologies.
Slack demand for electricity because of the recession and an abundance of permits helped push the price of emitting a ton of carbon below €5 ($6.60) earlier this year, from nearly €30 in 2008.
Without some intervention to reduce supply, "the ETS will almost certainly collapse," said Kash Burchett, a London-based analyst at consulting company IHS Energy.
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