EU Climate Commissioner Connie Hedegaard would like to make CO2 allowances scarcer and thus more expensive. But why are pollution rights so cheap to purchase?
The EU emissions trading scheme has been in existence since 2003. The idea is that industries burning lots of oil, gas or coal must pay for every ton of carbon dioxide introduced into the atmosphere. At the same time, companies that switch to renewable energy or reduce power consumption can sell their unused emissions rights.
Initially, the allowances were distributed free of charge to 11,000 companies within the European Union. Companies that successfully implemented the savings were able to sell their surplus emissions certificates. But businesses emitting more CO2 than their quota were required to purchase additional allowances. The certificates were issued by EU member states. In Germany, the state-owned KfW development bank was responsible.