I missed it earlier this week in all of the news-craziness, but the 27-member European Union’s cap-and-trade scheme doesn’t seem to be doing very well — and after the European Parliament rejected an attempt to artificially hike up carbon permit prices to try and bolster the flailing program, some analysts are wondering if the whole thing isn’t about ready to go kaput:
More banks and trading houses could abandon Europe’s carbon market, making government auctions of permits more likely to fail, after the European parliament on Tuesday rejected an emergency measure to prop up prices.
Prices for EU carbon permits under the Emissions Trading Scheme (ETS) fell 40 percent to under 3 euros on Tuesday after lawmakers rejected a plan to temporarily cut permit supply by 15 percent for fear that higher carbon prices would cost European jobs and harm economic growth.
About 5,000 companies generating half of the EU’s greenhouse gas emissions must surrender a carbon permit for each tonne of carbon dioxide they emit. Some factories receive permits for free, while most power firms buy them from companies with a surplus or from state-backed auctions held almost every day.
Campaigners and traders warn the carbon price could now fall below 2 euros or even to near zero in the coming weeks, and government sales could fail if they don’t meet minimum price requirements, as banks that act as liquidity providers pull out.
Good thing they rejected the plan, too — the eco-radicals are obviously most put out about the no-confidence vote, but can you imagine what even higher energy prices would do to Europe’s many stagnating economies? The cap-and-trade scheme has been on the strugglebus ever since the recession hit back in 2008, but I suppose that’s what happens when you’re apparently determined to learn the hard way that economic concerns will always trump environmental ones.
Meanwhile, much of Europe is steadily resisting the shale production that is responsible for the United States’ lately decreased carbon emissions. Kind of funny that the U.S. never even signed the Kyoto protocol, but since 2005 our emissions have been falling faster than Europe’s — without even trying to orchestrate or do anything except earn a profit. Weird how that happens, isn’t it?
U.S. carbon-dioxide emissions have fallen dramatically in recent years, in large part because the country is making more electricity with natural gas instead of coal.
Energy-related emissions of carbon dioxide, the greenhouse gas that is widely believed to contribute to global warming, have fallen 12% between 2005 and 2012 and are at their lowest level since 1994, according to a recent estimate by the Energy Information Administration, the statistical arm of the U.S. Energy Department.
While other factors, including a sluggish U.S. economy and increasing energy efficiency, have contributed to the decline in carbon emissions from factories, automobiles and power plants, many experts believe the switch from coal to natural gas for electricity generation has been the biggest factor.