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Europe’s Carbon Scheme Goes Up in Smoke
Posted on Jan 27, 2013
By Paul Brown, Climate News Network
In fact some were set so high that the industries stayed well below them without taking any efficiency measures at all. They therefore gained carbon credits simply by lobbying governments and were able to profit by selling them.
While the carbon trading scheme was not a disaster in all sectors and all countries, it has failed to achieve its objectives. This has been worsened because, built into the scheme, were forecasts for economic growth which were not fulfilled.
The European Commission failed to adjust the trading scheme to fit these new circumstances, and as a result there are now so many unsold carbon credits on the market that it is hard to see how the price could recover.
The EU began looking at ways to rescue its flagship policy by withholding unused credits and releasing them onto the market later, or simply cancelling millions of them. Germany is lukewarm on these rescue plans and some governments are outright opposed, for example Poland, which has a large coal industry and would lose sales if polluting factories were penalised.
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However, the European Commission has warned that the scheme could become irrelevant unless parties agree a rescue plan. “This should be the final wake-up call both to governments and the European Parliament,” EU Climate Commissioner Connie Hedegaard said.
Not all of industry is opposed to the system. Royal Dutch Shell’s environment advisor David Hone said what was needed was a clear price on carbon rather than a volatile and unpredictable market.
Some non-government organisations are scathing about the chances of EU efforts pushing the price of carbon back up and believe the whole system is so discredited it should be abolished.
Joanna Cabello from Carbon Trade Watch said: “The ETS is not fit for purpose. It has generated windfall profits for polluting corporations, postponed the needed transition away from fossil fuels, and its unintended consequences are locking the EU into another generation of energy production based on fossil fuels. These structural flaws remain unaddressed by the Commission.
“Instead of taking their responsibility, politicians have voluntarily put their main instrument to fight climate change in the hands of the financial markets. As we know, market mechanisms have their own dynamic. Profit-making and not fighting climate change has become the overriding objective of the players involved in carbon trading.”
She said it was an illusion to believe that proposals by the Commission would be able to improve the scheme substantially.
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