Europe Votes To Rescue Emissions Trading Scheme
Europe Votes To Rescue Emissions Trading Scheme
Tildy Bayar, Associate Editor, Renewable Energy World
July 03, 2013
LONDON -- Europes Parliament voted today to implement a short-term solution to the oversupply in its carbon market, which has been dragging down its troubled Emissions Trading Scheme (ETS).
...The positive result was unexpected after a first proposal was rejected in April. Marcus Ferdinand, senior market analyst with Thomson Reuters Point Carbon (TRPC), told REW that The market was surprised by how clear the majority was we did not expect a clear statement by the Parliament. This is the best-case outcome that today could have delivered.
But carbon price reductions are unlikely to begin before mid-2014, and it is far from certain that backloading will be a success. A legislative proposal to deliver structural reforms to the ETS is due by the end of this year. Much will depend on what positions crucial undecided Member States such as Germany decide to take.
Launched in 2005, the ETS was expected to deliver 2.8 billion tonnes of carbon reductions by 2020 through a carbon cap and the trading of emissions permits. Industry was given an initial number of permits based on economic conditions at the time but the global recession brought a downturn in production, mooting original market conditions. Now the market is oversupplied, with an estimated surplus of two billion allowances and the price of carbon plummeting from an originally anticipated 20-30 per tonne to a record low of 2.63 per tonne after Aprils no vote. Prices currently hover around 4 per tonne.
While backloading will ...
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