EU Parliament rejects carbon market rescue fix

EU

European Union politicians rejected a plan to prop up the world’s biggest carbon market on Tuesday, sending it plunging to a new record low and raising questions about its survival. After months of bitter debate, a plenary session of European Parliament in Strasbourg rejected by 19 votes a Commission proposal to temporarily remove some of the oversupply that has overwhelmed the market for permits to emit carbon dioxide. Traders took the lack of political support as a signal to sell, driving the market down to its lowest yet. Immediately after the vote carbon prices dropped by around 40% to €2.63 a ton. Climate Commissioner Connie Hedegaard said in a statement the Commission was still convinced its proposal, known as backloading, could restore confidence in the Emissions Trading Scheme (ETS) pending deeper reforms. A majority of member states, which have been debating the plan in parallel with the parliamentary process, is said to support the Commission proposal. National representatives are expected to debate what to do next this week.

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