Prices in Europe’s carbon emissions trading scheme have collapsed this year, in part because there were too many allowances in the system starting off, threatening the future of the whole market.
“Without intervention … Europe’s climate policy is over,” one analyst said. Some of Europe’s biggest energy and manufacturing firms also wrote a letter to the European Commission that called for Europe to take “decisive action now” to raise the price of carbon and fix the scheme.
The European Parliament’s environment committee voted in favor of temporarily cutting the number of emissions permits to be issued.
This year, the price of permits has fallen about 50 percent. Emissions allowances are now about 6 euros per ton—a four-year low, and about half what they were when the market began. Denmark, which will take over the presidency of the European Union in 2012, said the current carbon prices are “not sustainable” and vowed to help fix the problem.
Part of the problem is that Europe’s economic crisis is escalating, risking a slump like in the 1930s to which no country will be immune, said Christine Lagarde, managing director of the International Monetary Fund, in a speech at the U.S. State Department. Also, a new energy efficiency effort could also cut the number of permits needed, another reason to issue less in the future.
Paving the Way for De-carbonized Energy
The European Commission presented its long-awaited “Energy Roadmap 2050,” aiming to point the way to meet the European Union (EU) goal of cutting emissions at least 80 percent below 1990 levels by 2050.
The report considered various ways of reaching these targets, and concluded that relying heavily on renewables would be no more expensive than boosting nuclear, or fossil fuels along with carbon capture and storage.
A de-carbonized energy system could be cheaper than “business-as-usual,” although de-carbonization would require large up-front spending. The report also said natural gas will be a “critical” fuel during the transition.
The EU soon needs to set renewable energy targets for 2030, said EU Energy Commissioner Günther Oettinger.
The European Union moved earlier this year to expand its emissions trading scheme to include flights in and out of Europe, and now the European Court of Justice has backed that law despite protests from the U.S. and others. The new decision, which goes into effect Jan. 1, may trigger a trade war.
Meanwhile, the U.S. Environmental Protection agency unveiled its first limits on emissions of mercury and several other toxic pollutants from power plants. The limits were 20 years in the making, and cover a variety of toxic compounds including arsenic, nickel, selenium, and cyanide.
The new standard gives companies three options: install systems to scrub their emissions, switch to natural gas, or shut down their plants. Some of the nation’s oldest—and generally dirtiest—coal-fired power plants may be forced to shut down, which could also benefit the climate.
Climategate Investigation Widened
The U.S. Department of Justice is apparently working with law enforcement officials in Britain to investigate who leaked climate researchers’ e-mails.
In the U.K., police raided the home of one climate skeptic blogger and confiscated two of his computers.
Flipping the Switch on Incandescents
A ban on the sale of incandescent light bulbs of 100 watts or more in the U.S. is supposed to go into effect Jan. 1, but an emergency spending agreement in Congress removed funds from enforcement of the ban, at least until October 2012. Experts say the lack of enforcement will likely have little effect, since light bulb manufacturers have already retooled and moved on.
The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.