Monday, August 20, 2007

Carbon price won't push power sector away from coal

Europe's main weapon against climate change, which makes industry buy rights to emit carbon dioxide, has not stopped power generators from using dirty coal because they can still make plenty of money from burning it.

The European Union launched a carbon market to try to make low-carbon sources of energy like gas, wind, biomass and nuclear more competitive against high carbon coal.

The problem is that soaring oil prices have dragged up gas prices in much of Europe too, making coal cheap by comparison and overwhelming the penalty that a carbon price imposes on burning coal.

"Energy price rises have driven more investment into coal and coal to liquids than into renewables, and have swamped carbon prices," said Nick Mabey, chief executive of the environmental and sustainable development group E3G....

From Reuters