EU Urged to Include Transport in CO2 Market, Research Group Says - Bloomberg

The European Union could expand its carbon trading system to include transport and start option contracts between public institutions and private investors to enhance the coverage of the program, Bruegel institute said. The EU emissions trading system, known as the ETS, imposes pollution limits on more than 11,000 manufacturers and power producers in the region, including Germany’s biggest utility EON AG. While the cap-and-trade program expanded in 2012 to include flights to and from Europe, the price of carbon allowances for December dropped 47 percent from a year ago amid economic slowdown and oversupply concerns. “The only partial coverage of important emitting sectors, namely transport, creates economic inefficiency,” Georg Zachmann, researcher at the Brussels-based Bruegel, wrote in an e-mailed report. “While the ETS has succeeded in containing carbon emissions in the power sector, it has not provided sufficient signals for incentivizing low-carbon investments. Thus, we suggest making the EU ETS wider and deeper.”