Today MEPs in the European Parliament passed a crucial measure which means the EU will now bring in ‘back-loading’ measures to bring down the price of carbon credits.
The EU reckons there’s a surplus of 2 billion allowances in the EU Emissions Trading System (ETS) which has seen the price of carbon recently sink as low as €4-5, when it was meant to be more like €30.
This led to criticism that businesses who must buy credits to counter the CO2 emitted during their business activities are able to do so cheaply, meaning there is no impetus to cut back on their carbon footprint.
Now the measure has been passed the price of carbon is expected to rise.
The vote follows calls at the start of the week from 12 EU energy ministers for MEPs to support the measure to hold back or ‘back-load’ the release of 900 million more carbon allowances until the end of the decade.
UK Energy Secretary Ed Davey who led the calls said on Monday backloading is “an important short-term measure to help stabilise the system”.
He described it as the first part of what could be a “twin track approach”, the second part being reform to the ETS and warned without the continent-wide scheme, carbon cutting will be “far more expensive” for industry and consumers.