A report from the House of Commons Environmental Audit Committee is alarming that the European Union's Emissions Trading Scheme (ETS) has not been not successful in delivering required investment in the low carbon technologies.
The report appeals the government to strengthen the investment by initiating a minimum carbon price of €100 per tonne of CO2. Intensified by the recession, presently the carbon prices have disintegrated to €15 per tonne.
According to the report, there should be introduction of new carbon tax to heighten the price. The first phase of the scheme (2005-2007) increased by 38 million tonnes but remained below the cap. The second phase (2008-2012) could not turn out to be very effective because but big firms were given free emissions credits before the economic downturn.
Tim Yeo, Chairman of the Committee said, "Emissions trading should be helping us to combat climate change, but at the moment the price of carbon simply isn't high enough to make it work. The recession has left many big firms with more carbon allowances than they need and carbon prices have collapsed".
He further advised, "If the government wants to kick-start serious green investment, it must step in to stop the price of carbon flat lining. Ministers should seriously explore the possibility of a carbon tax and must press the EU to tighten up the overall caps in the Emissions Trading System".
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