European Carbon Trading in Trouble

The great God Market suffers another blow. "Europe Rejects Bid to Raise Cost of Carbon Emissions," a story this morning by Stanley Reed, reports that the European Parliament voted down a plan to raise the price of carbon credits.The cost of carbon credits has plummeted since 2008:

The Parliament turned down a proposal from the European Commission, the executive arm of the European Union, to bolster the price of carbon allowances by withdrawing about a quarter of the allowances scheduled to be auctioned through 2015. Even before the vote, the price of allowances had plunged from 25 euros a ton in 2008, to 7 euros a year ago, to less than 3 euros earlier this year. The main reason for the collapse is the economic crisis in Europe, which has meant reduced industrial activity and a glut of allowances.

Subsequently countries like Britain are burning 25% more coal than last year while taking offline cleaner natural-gas burning power plants. Without a withdrawal of the new auction the price of a carbon credit will soon be zero. This is an enormous blow for those who argue that capitalism is not in inherent conflict with environmental sustainability.