Data released by the European Commission has highlighted an undershoot in the amount of carbon emitted under the region's emissions trading scheme since its implementation in January 2005.
<p>The figures released by the EC cover the 2005 phase of the scheme, and reveal that total EU carbon emissions came in slightly below the quota for the year of 1.829 billion tons.<br /><br />News of the failure to fulfill the quota – 2005 emissions totaled 1.785 billion tons – confirms earlier leaked reports that several member states had undershot their allocations, raising doubts as to whether the current trading system provides a real incentive to reduce pollution. Germany, the EU's largest polluter, missed its quota by some 4%, for example.<br /><br />There is also speculation that several UK power generators may be plotting legal action against Brussels after the EC's data showed the UK had exceeded its agreed quota under the national allocation plan. The UK government believes this assessment is unfair as it does not include a more lenient allocation agreed with the EU last year.<br /><br />The way the information has been published has compounded the situation. Several member states' results for 2005 were leaked on the internet last week, prompting a sharp fall in the price of carbon on the EU's carbon trading market. <br /><br />This in turn has prompted critics to claim that the carbon market itself is too volatile for power generators and other major energy users to plan for. Industry needs to factor in the cost of carbon credits into its longer term fiscal planning, making a stable carbon price essential.</p>