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The stage is now set for a dash for coal by Europe's power generators. A messy row in the European Parliament over measures to repair the ETS, the EU's broken carbon trading system, has led to the collapse of the price of carbon allowances. It is now so cheap to emit carbon, and European industry is hoarding so many permits to emit the greenhouse gas, that it makes little sense to do anything but burn the cheapest fuel the market can supply.

For Europeans, recently, the cheapest energy deal has been coal. Power generators have been tempted by the widening dark spread – the profit margin earned from burning coal – even after factoring in the cost of purchasing allowances to emit carbon. Towards the end of last year, darks spreads in the U.K. were double the margin of the previous year, and the reason is the weakness in the price of the fuel.

Coal is cheap, and getting cheaper, because America doesn't need the stuff – the shale gas revolution is supplying an even cheaper and cleaner fuel to U.S. power generators. In Europe, natural gas is expensive; the dominant supplier, Gazprom, still exercises control over the price via its long-term contracts. In theory, power generators ought to be deterred from opting for a cheap but dirty solution because the cost of purchasing carbon allowances on the ETS would eliminate the price advantage of burning coal.

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The cost of an ETS carbon allowance fell to less than €3 ($4.06) per tonne last week, a tenth of the price deemed necessary to level the playing field in favour of investment in renewable energy projects. Meanwhile, most forecasters reckon that thermal coal prices will remain low, thanks to weak Chinese and American demand. Someone will buy the unwanted U.S. coal, and it could be Europeans.

Unless, that is, the cost of emitting more carbon makes burning coal expensive. That is unlikely, because ETS has been suborned by European politics. In the early years of the scheme, too many allowances were issued. A plan to withdraw 900 million allowances from the system has been scuppered by Polish objection (Poland is a major coal producer and consumer) and the German government is split between the virtue of clean energy and the need for economic efficiency.

In the battle between purity and expediency, we can expect the latter to win, at least until Europe's economic motor accelerates once again. Today, we can only hear the chug, chug, chug of an engine idling.

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