London, 6 July 2011

A predicted over-supply of 1.9 billion tonnes of carbon permits in the EU's emissions trading scheme to 2020 is risking a carbon price slump, according to a report by the environmental NGO Sandbag.

New research in the study Buckle up! Tighten the cap and avoid the carbon crash says that the intended abatement covered by the excess carbon permits is equal to around a year's worth of carbon permits. The group estimates that in Phase 2 around 672 Mt of carbon will be banked, from an excess of 855 Mt, and carried over into Phase 3.

"As the evidence mounts that the cap has been set too high, the European Commission’s proposals for adjustment have become increasingly timid. It is time for the broad political base that first established the ETS to rally together to fix the system so it can work as it was originally intended," says Damien Morris, the report's author.

"Our climate seatbelt is so loose it's almost useless, and Europe urgently needs to buckle up and remove at least 1.7 billion permits if it is to get its flagship policy back on track," he said.

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