EU carbon trading system in free fall, "centerpiece of Europe's climate efforts will achieve nothing for next decade," UK Guardian

2/14/13, "Carbon fat cats are killing the emissions trading mouse," UK Guardian, Damian Carrington

"Sandbag's Damien Morris says the EU ETS is now carrying 2bn spare allowances: "The policy that was supposed to be the centerpiece of Europe's climate efforts now promises to achieve nothing for most of the next decade....

When the energy and industry committee of the European parliament voted in January against the back-loading of permits, the carbon price crashed to €2.80. That was a non-binding vote but on Tuesday the environment committee will give its view, which must be positive if the initiative is to progress....

Fixing the ETS really matters, not just for Europe's emissions but for demonstrating that carbon trading can work.  China, for example, has spent a lot of time in Europe examining the ETS as it sets up its own schemes at home. I hope they are learning the lessons.

If the 900m permits are backloaded, analysts suggest the carbon price would move to €15. This clearly moves it towards reflecting the environmental damage caused, but not enough to drive significant action. That is because the problem of oversupply is far bigger....

Ultimately, these spare permits will need to be cancelled. That would demonstrate genuine ambition to tackle climate change in the EU and help the bloc ensure it leads in the low-carbon sustainable economy of the future. Tuesday's vote will be a critical test of resolve."...via Tom Nelson