Carbon trading and subsidies

In the excellent series the Financial Times has been running on carbon trading, Fiona Harvey writes that

Power generators will make tens of billions of euros in profit from the second phase of the European Union’s emissions trading scheme, according to predictions in an analysis of the market released on Friday.

Companies don’t have to pay for most of the carbon they may emit, they are issued with allowances.

Across the EU, governments plan to auction only 1.5 per cent of the available allowances. Electricity generators are expected to profit by passing on the cost of buying allow­ances to customers in lib­­eralized electricity markets.

The EU Emissions Trading Scheme is a scheme that provides huge subsidies for power generators, most of which are coal powered.

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