European Cap-and-Trade Market Takes a Nose Dive

The European Union’s cap-and-trade system took a huge hit on Thursday, with carbon prices plummeting a record 40 percent after a panel rejected a plan to delay emission permit sales to alleviate the overabundance of permits already in the system.

“The market is panicking, really,” Daniel Rossetto, managing director of Climate Mundial, told Bloomberg, adding that traders fear that Europe’s carbon emissions market won’t continue past 2020.

An excess of carbon emission permits in the 54 billion euro trading system drove the price down 91 percent from its record high in April 2006. Carbon permit prices sank to a record low of 2.81 euros ($3.75) per metric ton immediately after the panel rejected the EU plan. However, prices slightly rebounded to 4.33 euros per metric ton.

“This should be the final wake-up call,” said EU Climate Commissioner Connie Hedegaard in a statement. “Something has to be done urgently. I can therefore only appeal to the governments and the European Parliament to act responsibly.”

The Financial Times reports that the carbon market has seen two record-low prices within the last four days, causing some analysts to say carbon permits are “worthless.”

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