European Parliament takes step closer to boosting the price of CO2

The European Parliament’s Environment Committee yesterday voted in favour of a proposal that will help to fix Europe’s ailing Emissions Trading System (ETS). The proposal could see surplus “permits to pollute” withheld from the market – a move which should push the carbon price up, providing polluting industries with an incentive to move away from fossil fuels.

“This is a good political signal showing that the EU still supports its carbon pricing policy. The ETS was designed to reduce emissions and level the playing field between fossil fuels and renewable electricity generation so that polluting technologies could finally be priced at their true cost to society. It has so far failed to reach these aims and today’s vote is a first step to fixing this,” Rémi Gruet, Senior Regulatory Affairs Advisor at EWEA, explained.

The current carbon price hovers around the €5 per tonne mark, but the current ETS – launched in 2008 – was designed around a carbon price of at least €25 per tonne. Since, the economic crisis has had the general effect of reducing carbon emissions meaning that thousands of carbon permits have been washing around the market at prices so low they no longer provide a reason to shift away from carbon-intensive processes.

While today’s vote is a good move towards getting the carbon price back up, it must still go through a final vote in the European Parliament’s plenary session scheduled for April when it may well meet strong opposition from MEPs with ties to heavy industry. Earlier this year, the Parliament’s industry committee gave a negative opinion on the proposal to withhold carbon permits.

Moreover, under the current terms of the proposal, permits will be “backloaded” – which means that they could be released onto the carbon market again at a future date. In order to provide a long-term fix to the ETS and keep the carbon price higher, these permits must eventually be permanently removed.

To find out more about the ETS, read EWEA’s FAQs here. And for more on EWEA’s official position, click here.


By Zoë Casey,