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Threat to Unravel Europe’s Carbon Market

Estonia and Poland have scored deeply significant wins in their battle with the EU over carbon quotas. In a decision that threatens to scupper Europe’s cap and trade scheme, the Court of First Instance annulled the European Commission’s decision to lower the carbon emission quotas of both countries.

The court said setting carbon limits is a matter for member states rather than the EU. The ruling could force the European Commission to review its quotas and undermine the fledgling carbon market.

Estonia and Poland have been fighting for more generous national caps on industrial carbon emissions, arguing that their industry would be hamstrung under the EU scheme.

The news sparked concern among EU carbon market participants that the ruling, if upheld, could cause an unravelling of the market, which depends on a tight cap on emissions.