Europe oversupplied by a year’s worth of carbon permits without urgent reform to ETS

A forecast 1.9 billion tonne oversupply of carbon permits in EU Emissions Trading System  ETS) is undermining action on climate change.  Urgent need to agree reduction of permit supply before next trading period begins in 2013.

New research by Sandbag Climate Campaign shows the expected oversupply of carbon permits in the ETS growing to 1.9 billion tonnes through until 2020.  This will likely depress carbon prices yet further, delay lowOcarbon investment and fail to halt the growth in Europe’s carbon emissions.

The report ‘Buckle Up  Tighten the cap and avoid the carbon crash’ provides a comprehensive analysis of the environmental performance of Europe’s ETS so far, and finds that the oversupply of permits to industrial installations has created a dangerous legacy.  Europe is offOtrack on intended abatement by the equivalent of a whole year’s worth of emissions covered by the scheme: a combination of oversupply carried over by industry some 672Mt and then basing the future cap on this over-allocation  pushing it up by 1.2Gt) has set the ETS on track for an oversupply of 1.9 billion permits that will increasingly undermine Europe’s flagship climate policy, threatening to derail it if left unaddressed.


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