Carbon vote a victory for EU industry

London – MEPs have narrowly voted down a proposal in the European Parliament to rescue the EU’s ailing carbon trading scheme.

The so-called ‘backloading’ proposal was intended to help eliminate a surplus of trading allowances that has undermined the price of carbon on the EU Emissions Trading Scheme (ETS). 

Carbon prices are currently running at around Euro5/tonne – about a sixth of the peak reached since the ETS was launched back in 2005. The slump, in part, reflects the impact of the global economic downturn since then.

The European Commission had proposed withdrawing around 900 million allowances from the market over the next two years to shore up prices.

While energy companies backed this move, major industrial users, who have to buy the allowance, argued that it would damage the competitiveness of EU industry. This includes against players in the US where energy costs have fallen sharply due to shale gas.