Selling hot air

It's coming up to the euro elections: the beginning of the silly season where you can vote for silly parties like UKIP and they actually get seats! Nobody seems to vote on European Union (EU) issues which is a shame because whether we like it or not, most of our laws are EU laws.

Environmentally, there are some interesting things going on at the EU level. For example, just over 40% of EU carbon emissions are covered by a cap and trade system known as the EU Emissions Trading Scheme. Capped in the sense that emissions are not allowed to go over a certain amount, and traded in the sense that businesses can buy and sell carbon to and from each other. Each business gets an amount of carbon credits and they then have to decide whether it's more profitable to reduce their emissions and then sell their surplus credits, not to reduce emissions and buy credits or do a mix of the two. The current price of carbon is around €15/tonne of CO2 and rising.

So far so good: we have emissions reductions and the cap and trade system appears to be working. Well, look more closely and we can see some issues. First, the carbon price has fallen sharply as energy prices have fallen. It was nearly €30/tonne. Some companies - thought to be coal dependent companies - are deliberately buying up the carbon at low prices to continue to invest in coal. There is an alternative: a price floor - the price will not be allowed to fall below a certain amount. This matters as it incentivises firms to invest in renewables and it acts as a carbon tax which many environmentalists have argued for.

Second, so far, most of the credits have been given away for free. So an electricity company can sell its free credits on the open market and make millions of euros. In other words, your electricity bill funded the energy companies' windfall profits. Why not auction them? The government gets the money and can redistribute the funds elsewhere, perhaps to pay for insulating all homes. It's not as silly as it sounds as the mobile phone companies paid billions to buy licences for 3G phones.

Finally, transport is not included in the cap and trade scheme. The fastest growing source of carbon emissions? Aviation. We need to ensure that transport is included with no get out clauses. Nor do we want industries claiming they need a relaxation of the emissions cap due to the recession.

This matters and we need to ask our wannabee MEPs their thoughts on this. We need people who can ensure the people have a voice at the table. You can be sure that aviation, coal and other big businesses do. There's only one political party that seems to have an answer, and it ain't red, blue or yellow.