Global concern about the ailing economy has led the European Environment Committee to revise its energy package. The committee announced that it agreed the European Union should revise key clauses in its climate and energy package to adjust for the current financial crisis. The economic slowdown has hurt carbon credit demand and pricing.

Over the past few weeks EU member states have requested permission to make some revisions to protect their economies.  Bulgaria, Estonia, the Czech Republic, Hungary, Latvia, Lithuania, Romania, Slovakia and Poland have criticized the proposed shift to a pan-European carbon credit auctioning mechanism and have gotten the support of France, Germany and Spain in their efforts to change the planned trading mechanism. See more here.

As Carl Mortished noted in the Australian, The price of carbon has collapsed. In only three months, life has become a lot cheaper for polluters. The financial cost of warming the planet has plummeted in Europe’s emissions trading system (ETS) and the effectiveness of such a volatile market mechanism in curbing carbon is being questioned. You may recall that the ETS is a mechanism to encourage businesses to reduce their carbon output. Europe’s larger companies are allocated permits to emit CO2, and these allowances, called EUAs, can be traded on exchanges. Companies that emit less CO2 than their allocation can sell EUAs for cash, but inefficient polluters must buy EUAs or face financial penalties. Carbon’s falling price spells companies going bust, the loss of jobs and the shredding of political reputations. Over the next year, no politician with re-election hopes will back a policy that would triple the price of carbon for industry and raise consumers’ energy costs. There is a wider question about the ETS that must be addressed, and that is whether it is a sensible mechanism to regulate carbon.

Finally, as David Fogarty, Climate Change Correspondent, Asia for Reuters reports here, U.S. President-elect Barack Obama’s credentials may be green, but gathering financial gloom means fixing the economy will take priority on his agenda before dealing with national carbon trading and clean-energy investment.  Analysts and carbon brokers believe Obama’s support for an emissions cap-and-trade scheme and plans to create millions of “green” industry jobs send exactly the right signal for carbon trading and the burgeoning renewable energy industry. But don’t expect miracles overnight, they said. Depleted government coffers, rising unemployment and plunging profits across most industries could prevent him from making sweeping changes in his crucial first year. “We’re guessing until he goes and checks his bank account and finds out how much in debt he is,” said Michael Hopkins, energy derivatives manager at TFS Energy Asia-Pacific, referring to the hundreds of billions of dollars pledged by the Bush administration to stabilize the financial markets.

Pushing through a national emissions trading scheme won’t be the top item on Obama’s hit-list, Hopkins said in Singapore. “I think he has other issues to deal with before tackling the environmental side of it,” he added.