A $12 billion windfall is expected for British power companies because exceeding the emissions limits is largely free of cost
The UK's biggest polluters will reap a windfall of at least £6bn from rising power prices and the soaring value of carbon under the new European carbon trading scheme that critics say fails to correct the flaws of the system it replaced.
From yesterday, the second phase of the European Trading Scheme (ETS) took effect. Analysts have predicted that the price of carbon for 2008, already trading at about €22 per ton, could nearly double under the new regime, which sets much lower emissions ceilings for the participating countries than those that existed under the recently ended first phase. Critics argue, however, that the scheme, under which nearly all allowances are granted free of charge rather than having to be bought by big polluters, has created a distorted market in which the worst offenders will enjoy bumper profits while incurring no extra underlying cost for producing greenhouse gases.
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