The European Union is considering strengthening its emission reduction target to 30% by 2020 and some of that could happen through retiring a number of allowances as part of plans to reform the European carbon market. Built into the plan is a strategy to stabilize Europe’s carbon trading market, primarily through delaying the auction of 900 million emission permits that are due to be sold in the next three years through 2020. The EU’s commission is looking to reduce an estimated two billion glut of allowances that it blames for driving down the carbon price to record levels.
Climate Action Commissioner Connie Hedegaard said postponing the sale of allowances marked a first step towards boosting the carbon price, but only structural measures would sustainably tackle the oversupply of allowances and ensure investor certainty. “The Commission wants an even more robust European carbon market that provides a stronger driving force for carbon markets elsewhere,” Hedegaard said.
