Abatement "key" to 2005 carbon market surplus

First examination of EU ETS allowance surplus finds emission cuts more important than over-allocation

More than half, and perhaps all, of the surplus of allowances recorded in the EU carbon market in 2005 looks to have been caused by companies reducing their emissions rather than by governments having handed out too many allowances, concludes a study from the Italian research institute Fondazione Eni Enrico Mattei.

Over-allocation in phase one has been widely blamed for volatility and falls in the price of carbon, which have dented the scheme’s reputation. It has also been suggested that emission cuts by companies could have played a part. But no one has tried to disentangle these factors until now (EED 15/05/06).

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