Nov 20 2011
The world’s most studied cap-and-trade system for carbon dioxide, the European Union’s Emissions Trading System, may be facing a collapse in the price of CO2 emissions, according to this article by Reuters. Analysts at both UBS and Deutschebank have indicated a prediction that, starting next month additional permits will push prices lower on an already oversupplied market for CO2 permits, and have indicated that further price cuts may occur in connection with the specter of a full-blown double-dip recession in the EU, precipitated by debt crises in Italy and Spain.
Has the EU ETS proven to be effective in reducing CO2 emissions? Do low carbon prices burden the economy without incentivizing a transition to cleaner forms of energy? Should the EU alter/abandon its approach to regulating emissions?