Carbon Permit Prices Plummet;Demand for Wind Turbines Also Drops

Sharply falling energy prices are taking a toll on efforts to reduce greenhouse gases and develop renewable energy, with prices for European Union allowances to emit CO2 hitting an all-time low and the wind turbine maker Vestas reporting a slowdown in demand. The cost of buying an EU permit to emit a ton of carbon dioxide has now fallen to 11.65 euros ($15.32), a drop of nearly two-thirds from the peak price last July. European power plants and other large CO2 emitters must purchase permits to emit carbon if they exceed government caps, and with permit prices low, CO2-emitters have less incentive to slash greenhouse gas emissions. Permit prices have fallen because economic activity has declined during the recession and also because low natural gas prices mean that utilities are burning less coal, which contains far more CO2 than natural gas and thus requires utilities to purchase more carbon allowances. Meanwhile, Danish wind turbine manufacturer Vestas says that while demand is still growing, it is about 15 percent lower than expected and has resulted in Vestas recently producing more turbines than it can sell.