Misaligned energy policies raise costs, cause wastage, undoing EU carbon market goals

Brussels

THE European Union's carbon market, designed to save the environment, is being undercut by a patchwork of national subsidies for renewables and misaligned energy policies that have helped cut in half the volume of power being traded.

The bloc wasted a quarter of the US$550 billion spent on renewable energy, according to analysis by consulting firm Bain & Co presented last month at the World Economic Forum in Davos, Switzerland.

Some energy-saving policies cost more than 18 times the price of the region's carbon allowances, Bain said. Power-trading volume in 2014 was 46 per cent that of three years previously, broker data show.

Overspending lowers the chance other nations will emulate the bloc's plans for emissions cuts as they prepare climate pledges under a United Nations process during the next six weeks, l…