EU MEPs have narrowly voted to reject a complicated proposal from the EU commission to reform the EU's carbon market by limiting the number of credits.
The proposal was backed by the UK but a number of Conservative MEP's reportedly rebelled - potentially swinging the vote.
The proposal to 'backload' credits sounded arcane. It was arcane. But it was also extremely significant - here's why:
See also:
Coal burning to go un-checked as EU rejects reform
1) EU emissions will rise, probably substantially
EU carbon credits were already worth less than 5 euros and their value is now likely to fall further.
What that means is that burning coal will have a competitive advantage against lower carbon gas and zero carbon energy throughout Europe.
If burning coal is cheap you burn more coal, if you burn more coal you emit more carbon dioxide. Simplz.
2) The UK will be under pressure to scrap its own measures.
The UK has implemented its own carbon floor price. At £16 a tonne of CO2 it is already around 4 times the cost of emitting greenhouse gases in Europe.
Major emitters - like steel manufacturers - are exempt, so the impact on competition won't be the issue some imagine.
However paralysis in Europe is likely to lead to two competing demands on the government.
One - to halt all measures to tackle climate change until the Europeans catch up, another to show leadership gaining a potential industrial advantage in clean energy.
3)The EU will lose its position of leadership on climate change
Paris is due to host a major round of climate talks in 2015.
The idea was that the EU would negotiate for a global deal on climate change from a position of strength. This isn't looking so plausible right now - though things may change next year.
4) Politicians and NGO's will now call for other steps to tackle coal burning
The UK is almost alone in Europe in passing legislation to ban new coal power plants without carbon capture and storage by limiting emissions.
There may now be calls for this to be extended to existing plants in the UK and for similar measures to be adopted around Europe.
There will also be calls for a new European Carbon tax, similar to that in place in the UK, though this is likely to meet fierce opposition.
