EU Carbon Price Tumbles
THE European carbon market, which Australia has agreed to join, resumed its new year rout yesterday when progress on a rescue plan fell short of expectations.
A European parliamentary committee voted in favour of a proposal to withhold almost a billion permits from a saturated market in an effort to boost prices. But the EU environment committee was unable to agree on legislation needed for the plan to be considered by the full European parliament.
The committee will meet next week to continue work on the so-called “backloading” plan, which would postpone the auction of 900 million carbon allowances.
Carbon prices fell 20 per cent to E4.09 ($5.28) in response to the delay in a repeat of the collapse that gripped the market last month, before closing at E4.58, down 10 per cent. Last month’s low was E2.81.
The collapse of the European carbon market is an embarrassment for European leaders who have talked tough on fighting climate change.
It is also a political dilemma for the Gillard government which has talked up Europe’s carbon market and carbon abatement policies to justify Australia’s carbon tax.