Carbon markets failing, say MPs

[Midas]

The carbon markets are failing in their role of encouraging investment in cutting CO2 emissions, MPs have concluded.

The environmental audit committee has urged the government to consider other measures, such as a floor price for carbon dioxide emissions, which would provide industries with greater certainty over the price of carbon and help to ensure the system of pricing was effective.

The MPs said a price of €100 per tonne of CO 2 could be necessary to encourage investment, compared with current prices of about €13.

Tim Yeo, who chairs the committee, said: "Emissions trading should be helping us to combat climate change but, at the moment, the price of carbon simply isn't high enough to make it work. If the government wants to kickstart serious green investment, it must step in to stop the price of carbon flat-lining."

Under the European Union's emission trading scheme (ETS), heavy industries are issued with a quota of carbon permits, and companies that want to produce more must buy spare permits from cleaner companies. This should encourage companies to invest in efficiencies and technologies that reduce their emissions. But, at current prices, the signal is widely acknowledged as too weak to prompt action.

Many companies are strongly against tightening the quota caps, however, as this would impose higher prices on them, raising fears that they could be undercut by rivals from countries without carbon-cutting regulations.

Yesterday, the CBI employers' body cast doubt on whether a floor price was the correct response. John Cridland, deputy director-general, said carbon prices had fallen because the recession had cut output, meaning companies needed fewer carbon permits.

The full story available from here : FT.com / UK - Carbon markets failing, say MPs

[Barry]

Not really surprising that investment is low in what is akin to purchase of the Emperor's new clothes!
The Emperor's New Clothes: Tales of type 1620

[DC]

ETS's don't work, they only serve to destroy small businesses who can't afford to buy more permits or push larger ones off shore where enviromental controls are virtually nonexistant.