The European Parliament has voted for a hike in carbon prices and cut to permits in a bid to tackle excessive carbon emissions.
Politicians in Strasbourg voted 344-311 in favour of temporarily removing up to 900 million permits, which companies and utilities buy to cover excessive carbon output.
A much higher carbon price will spur the industry to invest in low-carbon energy, the EU Emissions Trading System (ETS) believes.
“This is a good decision by the European Parliament and is an important step forward for climate change policy. We need a stable carbon market so we get a more certainty for investors so emissions reductions can be achieved at the lowest cost possible,” the UK Energy Secretary Ed Davey said following the vote.
“There is still much work ahead, and we must now focus on securing agreement to the proposals in Council in order to facilitate a deal.
“Alongside this, there should be a parallel focus on the urgent need for structural reform of the European Emissions Trading Scheme, in order to promote growth in low carbon industry in the longer term. We are calling on the European Commission to bring forward legislative proposals by the end of this year, along with 11 other EU Member States”.
Analysts have estimated that the removal of permits can boost EU carbon prices to an average 8 to 9 euros (£7 aprox) over the next eight years – almost double the current levels.
But the analysts also say that carbon prices must reach levels of 40 to 50 euros (£34 – £42) to drive investment in lower carbon energy.
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