The European Parliament just voted down a measure that would have attempted to revive its carbon market, likely dooming it to a slow and undignified death. This was a last-ditch effort to drive the EU’s carbon price back to a level that would incentivize green reforms. And it failed.
The EU’s carbon market was the flagship program of its recent green efforts. Ideally, it would have given companies a reason to emit less carbon. Companies that emitted less than allowed could have sold off remaining carbon credits to firms that emitted more. But the authorities gave out too many credits, and as Europe’s economy faltered the price for those credits plummeted. The vote today was meant to save the program by addressing this over-allocation, creating an artificial shortage that would drive permit prices back up, but in a time of financial crisis, the European Parliament chose industry over green ideology. The WSJ reports:
“It was a vote of reason,” said Poland’s environment minister, Marcin Korolec. Poland, one of the EU’s less-affluent members, has been outspoken in its opposition to the measure, which it said could hamper development. [...]
After the vote, the price [of carbon credits] dropped to €2.55 before recovering partially to €3.2…down from nearly €30 in 2008.
Without the backloading plan to increase scarcity on the emissions permit market, “the ETS will almost certainly collapse,” said Kash Burchett, a London-based analyst at consulting company IHS Energy.
The EU has been the global laboratory testing the green agenda to see how it works. Today’s story means that the guinea pig died; the most important piece of green intervention in world history has become an expensive and embarrassing flop. It’s hard to exaggerate the importance of this for environmentalists everywhere; if the EU can’t make the green agenda work, it’s unlikely that anybody else will give it a try.