The European Union's executive body is considering how to strengthen the bloc's carbon market, the Commissioner for Climate Change said Tuesday, in a sign that the debate on how to boost carbon dioxide prices is catching the attention of the highest policy makers in the EU.
The European Union's executive body is considering how to strengthen the
bloc's carbon market, the Commissioner for Climate Change said Tuesday, in a
sign that the debate on how to boost carbon dioxide prices is catching the
attention of the highest policy makers in the EU.
"To preserve this truly European and cost effective policy tool we have to
consider and we are considering how to strengthen the ETS," Connie
Hedegaard told a conference.
The ETS, or Emissions Trading System, is the EU's flagship tool to fight
climate change by putting a price on carbon-dioxide emissions and capping their
quantity. The idea of the market for CO2 is that companies would prefer to
invest in long-term green technologies rather than buying permits to emit CO2. The
higher the price of permits, the stronger the incentive.
But prices on the market have hit record lows in recent months, raising
questions about its effectiveness in triggering long-term investments in clean
technologies to reduce greenhouse-gas emissions.
This has spurred a debate on how to reinforce the incentive the ETS is supposed
to offer in encouraging investments in clean technologies, but
Europe
's
present economic and financial struggle has been preventing the commission from
making concrete proposals.
Many countries see a higher carbon price as a cost for their industries. And
starting in 2013, companies will have to buy more permits that they now get for
free.
One solution would be to remove some allowances from the market to create a
shortage, a measure called set-aside, an initiative strongly backed by the
environment committee of the European Parliament in December.
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