The EU Carbon Market Perks Up After Years in the Doldrums

摘要

Sixteen years ago, Europe introduced a market based on what was then a revolutionary notion:forcing companies to cut greenhouse gas emissions by issuing credits that allow them to pollute upto a certain level. If they spew out more, they have to buy allowances from other companies. If theypollute less, they can sell their extra permits and bank the cash.This so-called cap-and-trade program, modeled after a U.S. effort to control acid rain, set carbondioxide limits for more than 11,000 facilities in sectors such as power, paper, and cement (andlater, aviation). It was a great idea that helped the European Union overcome a decade-longstalemate on a carbon tax, but it had a fundamental flaw: The permit levels were determined inprosperous times, and there was no plan for reducing supply in the event of a sharp fall in output.