Price incentives for pollution
Low prices for emission permits do not encourage firms to reduce their carbon emissions:
“Chris Rogers, utility analyst at JPMorgan, says that at current prices it is far cheaper for utilities to burn coal – and buy the emissions permits that allow them to pollute – than it is for them to buy cleaner fuels such as natural gas.
He estimates that a utility can buy coal that is €10 per megawatt hour cheaper than gas.
“There is no economic incentive for users to import less coal than they did last year,” he says.”
As reported in the FT here.