The Economist


Carbon trading: Below junk status

The Economist

EUROPE’S flagship environmental policy has just been holed below the water line. On April 16th the European Parliament voted by 334 to 315 to reject proposals which (its supporters claimed) were needed to save the emissions-trading system (ETS) from collapse. Carbon prices promptly fell 40%. Some environmentalists fear that the whole edifice of European climate policy could start to crumble.

The ETS has long been troubled. The scheme is the world’s biggest carbon market, trading allowances to produce carbon which cover about half the European Union’s total carbon emissions. Partly because of weak industrial demand and partly because the EU gave away too many allowances to pollute in the first place, there is massive oversupply in the carbon-emissions market. Prices fell from €20 a tonne in 2011 to just €5 a tonne in February 2013. The European Commission, the EU’s executive arm, therefore hatched a plan to take about 900m tonnes of carbon allowances off the market now and reintroduce them in about five years time when, it was hoped, demand would be stronger (“backloading” in the jargon). This was the proposal the European Parliament turned down.

Rappelons que samedi dernier, on a annoncé que les deux « hommes malades » de l’Amérique du Nord, le Québec et la Californie, ont officialisé l’unification de leur marché du carbone. Parions qu’il connaîtra un sort similaire à celui des Européens.