EU carbon price crisis leads to intervention

http://www.washingtonpost.com/world/europes-carbon-
trading-market/2013/05/05/d0729d0a-b5da-11e2-92f3-
f291801936b8_graphic.html

The EU has agreed to carbon market reform measures in an attempt to deal with the oversupply of carbon credits in the market that has resulted in a sustained collapse of the traded price for the EU emissions allowance (EUA). Introduction of the market stability reserve will be brought forward to 2019 in an attempt raise EUA prices which are currently trading at  just €7.66 per tonne CO₂e (May, 2015). Forecasts had suggested that this price would stagnate or at best rise to between €8.70-18.30 per tonne CO₂e by 2020, so the EU has been forced into action.  The new measures are predicted to triple the EUA price by 2020. 

In a recent interview Professor Nick Gray of Trinity College Dublin and author of Facing up to Global Warming welcomed the news but reiterated that ‘the price will still be well below that  required to stimulate either investment in renewable and alternative energies or mitigation measures.  The new measures will of course help to raise and even stabilize prices, but forecasts have generally been overly optimistic, so we could still end up with a very low carbon price by the end of the decade.  With the cost of carbon-capture predicted to level out at around €50-60 per tonne of CO₂e, we have to ask ourselves again just how much we should be paying for offsetting carbon emissions.’  

Post: Pete Ferris