Europeans fail to correct the error of too many emissions allowances
The Associated Press reported that the European Union failed today to fix their emissions trading system. The price of emissions allowances has fallen to about 5 euros ($6.5 US) per ton of carbon dioxide, which is about one quarter of the value that has prevailed over most of the system’s history. The price dropped because the politicians, in their wisdom, allocated too many allowances in an effort to buy off the various status quo interests who would be affected by the system.
Such shenanigans are another argument for a simple carbon tax, collected at the top end of the market for fossil fuels, i.e. on the producers of fossil fuels. A carbon tax is much simpler and cheaper to administer and enforce. If you’re going to use emissions trading, at least understand that you need to crank down on the allowable emissions over time, to track the emissions reductions that will be needed to preserve a livable climate.
