Steam rises from cooling towers at the Jaenschwalde coal-fired power plant on August 20, 2010 at Jaenschwalde, Germany. - 

A vote in the European Parliament tomorrow could deal a fatal blow to one of the key measures for tackling climate change.

Europe’s emissions trading system aims to make it more costly for companies to emit harmful greenhouse gases, but the system is creaking at the seams. There are too many so-called carbon permits in circulation; the price of the permits has slumped and the cost of emitting carbon has now fallen to a derisory $5 a ton. That’s not much of a deterrent against pollution. 

Tomorrow the European Parliament votes on a potential remedy. The influential environment committee will decide  whether the European Commission should be given the power to halt the issuing of new permits and so drive their price up again.

Mark Nicholls, Editor of  Environmental Finance Magazine, says a great deal is riding on the vote:

“There’s lots of interest in emissions trading as a solution to climate change, but if the EU’s system is seen to be collapsing, it could damage the credibility of the approach,” says Nicholls.

If the European system does fall apart, the Chinese might well shelve their plans for emissions trading. And  it could undermine confidence in some of the systems that are already up and running in the United States.