EU emissions trading scheme an 'embarrassing failure', think tank says
17 August 2007, source edie newsroom
The attempt to create a global carbon market and a "global price for carbon" through trading is unlikely to be successful, says a think tank devoted to debating the direction of the EU in a new report published earlier this week.
The European Union Greenhouse Gas Emission Trading Scheme (EU ETS) was set up for operations in January 2005 as the "largest multi-country, multi-sector Greenhouse Gas emission trading scheme world-wide."
In a statement, Open Europe says:
"Almost everyone now acknowledges that the first phase of the system - running from 2005 to 2007 - has been a failure: more permits to pollute have been printed than there is pollution.
"The price of carbon has collapsed to almost zero, creating no incentive to reduce pollution. As a result, UK firms covered by the scheme increased their emissions by 3.6% in the first year alone. Across the EU, emissions from installations covered by the ETS rose by just under 1%."
In a foreword to the study, Swedish Green MP Max Andersson writes that:
"There has so-far been limited questioning of the hazy assertion that the EU is good for the environment. This new study from Open Europe attempts to challenge this claim, arguing that real environmentalists should be very sceptical indeed of the EU's record on this area."
Hugo Robinson, an analyst at Open Europe says that the EU ETS is costing a lot, but it isn't working. He thinks that member states have opted to buy in vast numbers of what are essentially carbon offsets from developing countries, rather than make real reductions in emissions.
He says: "International action should focus on setting tough and enforceable national targets for greenhouse gas reduction. How to reach those binding targets should be up to individual countries."
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By Alan Buxton
"Finally, the ETS in phase one was not a real market." You identify the allocation of permits through lobbying power rather than through auctions as major causes of the failure of Phase 1. Might Phase 2 not be better served by addressing this issue and using the market to allocate permits?
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