EU Rejects Suspension of Auctions of EU Allowances; California Air Resources Board Formally Approves Linkage with Quebec

On April 16, 2013 the members of the European Parliament voted 334-315 against the proposal of the European Union (EU) Commission to suspend future auctions of EU emission trading scheme (EU ETS) allowances until 2019 in order to prop up the EU carbon price and absorb the estimated 1.5 billion unused EU allowances currently sitting in registry accounts.

Those voting against the suspension, primarily representatives from Poland, the UK and Italy, expressed concern that the proposal would raise energy prices and stifle Europe’s economic recovery. Pending the outcome of the vote, the price of EU allowances had been decreasing steadily, reaching 3.12 Euros (US$4.00) at close of business on April 16, 2013.

The impact of this decision on greenhouse gas cap-and-trade schemes in Australia, California and Quebec will depend on the extent to which such schemes are linked to one another and to the EU ETS. In order to assist in understanding the issues that may arise from linking such schemes, we have prepared the accompanying table summarizing and comparing the salient features of each scheme.

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