Carbon Permit Price Fall to $5bn Tonne

The European Parliament has signed off on a proposal that would allow for delaying the auctions of millions of carbon permits, in an effort aimed at propping up prices in the EU’s struggling carbon market. The measure passed in a narrow vote of 344 to 311 on Wednesday afternoon, reversing the results of an earlier decision blocking the plan.

Climate observers had been closely watching the result of this week’s vote, and what the outcome would mean for carbon permit prices, which have dropped from €30 per tonne in 2008 to an average of around €5 per tonne - well below what analysts say is necessary to foster low-carbon investment and energy generation.

The low prices have, in turn, sparked questions over whether the EU’s Emissions Trading System (ETS) - which relies on these permits - will be able to survive in the long-term, and whether the bloc will be able to meet its climate goals, such as reducing emissions by 20 percent from 1990 levels by 2020.