Changes to emissions trading scheme are not the large-scale reforms that campaigners and green businesses had urged
The European Union moved to shore up the faltering price of carbon dioxide emissions on Wednesday, amid widespread concern that the current low price is failing to encourage companies to reduce their greenhouse gas output.
But the changes announced to the emissions trading scheme are relatively minor, resulting in changes in the timings of auctions of carbon permits, rather than the large-scale reforms that campaigners and green businesses had urged.
The current carbon price stands at about €7 (£5.40) per tonne of carbon, which is well below the price of €25-40 per tonne that analysts say is needed to encourage companies to change their behaviour. After the proposals were announced on Wednesday morning, the price of carbon dipped to €6.70, in an indication that analysts had been expecting bigger changes.
As Europe’s economic activity has slumped in the past few years, the number of carbon permits available to companies for free has heavily outstripped the number they need. Many companies have been hoarding the permits they receive for free, with some now sitting on billions of euros’ worth of carbon allowances that will let them evade paying a price for their emissions for years.