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EU Carbon Trading Scheme Led to ‘Dash for Coal’ in Germany, Study Says


European efforts to curb carbon emissions may have actually encouraged construction of traditional coal-fired power plants in Germany, according to a new study by the Potsdam Institute for Climate Impact Research.

To promote the use of cleaner energy sources, the European Union in 2005 launched an Emissions Trading System in which pollution permits were issued to power generators, which they could sell to “dirtier” generators.

But rather than encouraging construction of cleaner-burning plants, the study notes, the new system spurred a “dash for coal” in Germany, with the addition of about 12 gigawatts of combined capacity — the equivalent of about one-third of the country’s peak demand in 2008. The new generators will emit about 54 megatons of carbon dioxide annually, said Michael Pahle, author of the study published in the journal Energy Policy.

According to Pahle, the system allocated permits according to demand from existing technology rather than prioritizing allocations to the cleanest technologies available, which meant that coal-powered stations received most of the permits. The European Commissions insists the scheme has nonetheless been successful, with carbon emissions falling 11 percent continent-wide from 2008 to 2009.

Article appearing courtesy Yale Environment 360.