European Lawmakers Approve Carbon Trading Plan
Members of the European Parliament passed a rescue plan for the European Union’s carbon trading system on Tuesday, reported the New York Times. The lawmakers are attempting to restore the price of carbon credits, which have fallen so low in recent years that the system no longer creates adequate incentives for industries to cut back on their emissions of greenhouse gases.
Europe’s Emissions Trading System is the largest carbon trading system in the world. Under the program, smokestack industries such as steel mills and coal-fired carbon plants are restricted in the amount of carbon dioxide emissions they can legally emit. Should the companies produce additional emissions, they must purchase allocations from regulators or through auctions. The purchase of a single allowance permits the company to emit one metric ton of carbon dioxide.
The new policy approved by Parliament will delay the allocation of one-third of the carbon-credits that had been planned to be offered in the next three years. Lawmakers hope that reducing the number of available allowances will increase prices, which in turn will incentivize industries to either reduce emissions or invest in clean-energy technologies. Officials will now move forward with drafting a specific proposal for how to remove 900 million carbon allowances over the next three years.
The financial crisis and resulting economic upheaval sharply reduced Europe’s steel-making industry, which undermined the carbon-credit price. In 2008, the carbon-credit price was 28 euros; today, the price of a carbon allowance is 4.8 euros, which is about $6.60. Analysts believe that the shortage in allowances could drive up prices over the next year, but that the market will likely remain oversupplied with carbon allowances through 2020.
The Chanler Group is actively engaged in the review and analysis of incentive-based renewable energy programs to determine potential benefits to our clients. Global energy consumption continues to increase each year and, with this increase, the demand for safe, clean, and unlimited energy is on the rise. The Federal and State governments promote this interest through a variety of financially-beneficial incentives. Our understanding of these laws allows us to guide homeowners, businesses, and/or developers through the various ways to take advantage of these incentive-based benefits. With the appreciation that renewable energy laws and regulations are constantly changing, The Chanler Group is committed to investing in its understanding and practice of this area of law.