Using “the market” as a means to absolutely reduce global greenhouse gas emissions has long been criticised as “pie in the sky” (and not a particularly clean pie at that). Now, in order to “prop up” carbon prices under the EU Emissions Trading Scheme (ETS), the European Parliament will auction some emissions permits which were earlier planned to be given away for free to carbon-intensive industries (notably power plants and steel producers).
On the face of it, this is a positive move and might lead to a more realistic pricing of the costs of continuing to pollute. But there’s plenty of scepticism about the proposal.
Some investors and environmental groups claim that plans to increase energy efficiency in Europe would reduce demand for emissions permits and thus lower their price. That would potentially undermine the “logic” behind the scheme.
But then that’s “the market” for you!