The European Union’s emissions trading scheme could be pushed into meltdown by a repeat of this summer’s forest fires in southern Europe if proposals to include woodlands within the scheme are approved, according to carbon traders and green groups.
EU leaders agreed to examine the inclusion of forests in the emissions trading scheme in June after a lobbying campaign by countries with big landmasses, such as France and Poland, who could gain from the change.
Begun in 2005, the scheme has placed a cap on the amount of greenhouse gas industry can produce in an attempt to fight climate change. Businesses that exceed their cap must purchase permits in the form of tradable carbon credits.
Under the proposed plan, forests and other land would be credited as stores of carbon, allowing landowners to sell the resulting permits on to factories that emit gases.
Many in the carbon market fear that fires or drought could result in a huge release of stored carbon as trees die, triggering a jump in the carbon price and crippling the trading system....MORE from the Financial Times