Europe’s once celebrated cap-and-trade system to limit carbon emissions has languished. The economic crisis has caused the price of emissions licenses to plummet, and a recent remedy to the problem has been rejected by EU lawmakers. Climate policy expert Felix Matthes tells SPIEGEL ONLINE that an opportunity has been squandered.

The European Parliament on Tuesday voted down a proposal to make it more expensive for companies to burn fossil fuels, in what environmental advocates are calling a major setback in the fight against climate change.

The European Commission, the EU’s executive branch, had proposed measures that would have increased the price per ton of emitted carbon dioxide that companies must pay under the bloc’s Emissions Trading System (ETS), which was set up in 2005. EU lawmakers narrowly rejected the bill 334 to 315, with 63 abstentions.

The ETS was initially lauded by environmental advocates as the world’s most ambitious effort to combat climate change. The number of certificates granting permission to emit carbon dioxide is capped, and companies can trade those certificates on the open market, in theory giving an economic incentive to invest in cleaner energy.

However the economy slump in Europe has caused the price of the emission certificates to drop dramatically, […]