The European Union’s flagship program to fight global warming—a regional carbon-emissions trading system—suffered a major blow Tuesday when legislators rejected a proposal aimed at saving the market from collapse.
After the European Parliament’s rejection, spooked investors drove the already depressed price of carbon emission permits down by nearly half. Benchmark electricity prices also fell.
The legislature derailed—at least temporarily—a plan to revive prices by postponing the issuance of any new permits for between five and seven years. Electricity generators and some other industries must buy the permits to cover their carbon dioxide emissions.
Isn’t that the carbon market we’ve been urged to imitate?
Don’t get me wrong. I’ve been in favor of a carbon tax for decades if only for geopolitical reasons. But carbon markets, e.g. “cap and trade”, have always struck me as mostly a great opportunity for rent-seeking.
Speaking of opportunities this looks like a good opportunity for me to air one of my ongoing gripes. I don’t think that most of the greening of Europe has anything to do with carbon markets or high fuel taxes or environmental controls or conservation. I think that almost all of Europe’s environmental success is due to China. That’s a pyrrhic victory as anybody downwind of China’s manufacturing zone could tell you.
