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Anorak | The European Carbon Trading system isn’t dead yet

The European Carbon Trading system isn’t dead yet

by | 19th, April 2013

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THE Wall Street Journal tells us that the ETS, the European carbon trading system, is dead. This is because the prices are so low that no one can be bothered trading :

One of the great policy bubbles of our times has been cap and trade for carbon emissions, and on Tuesday it may have popped for good. The European Parliament refused to save the EU’s failing program, which is the true-believer equivalent of the pope renouncing celibacy.

The Parliament in Strasbourg voted 334-315 (with 63 abstentions) against propping up the price of carbon credits in the EU Emissions Trading System. The failed proposal would have delayed the scheduled sale of 900 million ETS permits over the next seven years, thereby suppressing supply. After carbon traders realized they weren’t getting more artificial scarcity, they drove the price of emissions permits down by 40% at one point on Tuesday.

The problem with this is that it’s grasping entirely the wrong end of the stick. A low carbon permit price is great news:

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Posted: 19th, April 2013 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink