A keystone of the EU's campaign to combat climate change is in tatters after critics claims that energy users groups had hoodwinked it over generous pollution permits.

The price of carbon credits fell by over 60% in May after claims that some countries had over-allocated annual emission quotas to power producers responsible for the majority of C0² emissions.

The fall in the value of permits has prompted fears that the EU's emissions trading scheme (ETS) could collapse.

The cap-and-trade scheme works by allocating annual emission quotas to 9000 energy-guzzling industrial installations. If individual firms exceed their cap, they must pay the market price for additional emission quotas, while firms that cut their emissions have credits to sell.

Under the scheme, 9000 major energy consumers emitted just 66m tonnes of C0² less than allowed last year. On the face of it, this could be regarded as a positive outcome. But critics claim it's a sign that the market has failed to encourage investment in renewables and low-carbon technologies.

The Renewable Energy Association has deemed governments proposals for biomass energy generation a missed opportunity after they failed to drive growth in the market.

Source

Building Sustainable Design