Dark clouds have suddenly gathered over the fledgling market for carbon dioxide (CO2) emissions, where prices plunged by more than half last week as European countries discovered they were polluting far less than they thought. The innovative market is the brainchild of the Kyoto Protocol for controlling greenhouse-gas emissions — the carbon gases emitted mainly by burning oil, gas and coal that are driving perilous climate change. Its backbone is the European Union’s Emissions Trading System (ETS). Under this, 11,500 firms that are big users of fossil fuels have to meet a target of CO2 emissions or else pay a penalty of 40 euros (50 dollars) a tonne for 2006 and 2007, a punishment that will rise from 2008 to 100 euros (125 dollars) a tonne. Those that are below their quota can sell their surplus on the ETS to companies that are over, thus providing a financial carrot to everyone to clean up his act. At the start of the week, a tonne of CO2 was changing hands at 30 euros a tonne, compared to 20.5 euros at the beginning of 2006. On Wednesday, the price crashed to 23.40 euros, and on Thursday […]