As everyone who has been following the European Emissions Trading System no doubt already knows, there’s trouble brewing. The problem is that, rather than auction off the permits, or allocate them on the basis of some rational set of equity principles, the folks in Brussels have engineered a “dysfunctional” system in which emissions permits go to the powerful, on the basis of past emissions or, uh, power.
The result, as all climate newhounds know, is a glut of allocations (hot air) and a drop in the price of carbon in Europe from the already low level of 30 Euros a ton to even lower, deep discount, bad-joke levels. Which you can read about in this admirably brief and direct report from a think tank called Open Europe.
None of this would be so bad if it was just a sign of birthing pains. But rumors indicate that the EU is not rising to the occasion, and that the next round of allocations won’t be much smaller. Cross your fingers, and hope that “European Leadership” has a bit of wind left in its sails