Surplus of Carbon Credits Threatens EU Emissions Trading Plan

The European Union’s emissions trading scheme — which puts a price on carbon dioxide emissions with the aim of reducing greenhouse gas pollution — is threatened by a vast number of emissions credits earned by major industries and power plants in Russia, Ukraine, and Eastern Europe. Peter Zapfel, deputy director of the environment department at the European Commission, said that because of the Eastern European economic collapse of the 1990s and loopholes in the EU emissions trading scheme that began in 2005, Russian and Eastern European enterprises have racked up 10 billion emissions credits because they released fewer greenhouse gases than originally allocated under the Kyoto Protocol. As these enterprises begin selling these credits on the EU carbon market, the price of emissions allowances could plummet, thereby defeating the goal of slashing CO2 emissions by establishing a high price on carbon pollution. Zapfel called the surplus credits the “gorilla sitting in the background and nobody dares to touch it.” The price of EU carbon allowances has fallen from a peak of 30 Euros ($44) in 2006 to roughly 10 Euros ($15) this year. The EU’s emissions trading scheme, which covers more than 10,000 major carbon emitting power plants and factories, is designed to cut CO2 emissions by 21 percent below 2005 levels by 2020.