Reuters: EU carbon market rescue may scrape by next week, prospects shaky
A European Commission plan to revive Europe's carbon market appears headed for a setback that would keep emissions prices depressed for years, although it may scrape approval in a European Parliament committee next week.
The Emissions Trading Scheme (ETS) was designed to force Europe's industry and power sector to cut emissions and shift to clean energy. Instead, over-supply and low demand for permits have dragged prices to less than 5 euros ($6.65) a tonne, well below the 40-50 euro level believed to encourage low-carbon investment.
To try to boost the market, the Commission, the EU executive, has proposed a temporary withdrawal of some of the surplus permits generated by over-generous allocation to firms in the first years of the scheme and exacerbated by recession.