The European Commission had proposed that an auction of 900 million carbon allowances scheduled to take place between 2013 and 2015 be deferred to 2019 to 2020, in an attempt to boost the price.

But the proposal was rejected, with 334 members of Parliament rejecting the proposal, 315 voting for it and 63 abstaining.

The European Union carbon price hit a €32 a tonne high in April 2006 but crashed to as low as €2.63 immediately after the vote.

WCA chief executive Milton Catelin applauded the decision, stating that Europe simply could not afford a high carbon price.

“The European Parliament has finally made a decision on environmental policy that recognises that there’s a balance to be made between environmental imperatives and economic growth,” Catelin said in a statement.

“At a time when across Europe governments are having to make difficult decisions to stimulate economic growth and tackle debt, it would have been madness to agree to backloading and ignore the cost burden of EU climate policies on consumers and European industry.

“The Polish government alone has estimated that backloading would have cost it €1 billion over the period 2013-2020.

“Other Eastern European EU members would have been looking at a similar cost.”

Last week, European Commissioner for Energy Gunther Oettinger made the point that the cost of energy needed to be given greater weight when setting EU energy policy and that the bloc needed to be more pragmatic about initiatives to reduce its greenhouse gas emissions.

“Both the vote this week and the comments by Commissioner Oettinger are welcome news,” Catelin said.

“For too long, European governments have seemed unwilling to measure the impact of environmental policies, not only in contributing to a reduction in global emissions but also their economic impact.”

The news comes as the International Energy Agency released a report showing that carbon emissions had remained stagnant despite a growth in renewable energies.

According to the report, solar power capacity increased by 42% and wind power increased 19% during 2012.

Coal only grew by 6% in double that time but because the total installed capacity of coal power was already substantially greater, the amount of coal capacity added was much larger than that of solar and wind power.

The IEA uses a complex calculation called the carbon intensity index to show how much carbon dioxide is emitted to provide a given unit of energy.

The index stood at 2.39 tonnes of CO2 per tonne of oil in 1990.

By 2010, it had shrunk only marginally to 2.37t.

The IEA stated that even the increase in natural gas consumption hadn’t decreased the use of coal worldwide as coal remained inexpensive, reliable and easy to incorporate into existing grids, with its major resurgence coming from developing economies.

The US data showed a turn towards natural gas while European coal use increased.

The report suggested that funding should be tripled to provide the kind of technology needed to replace fossil fuels while the actual spending on energy research and development, which is currently going down, should be increased.

It also called for a reduction in subsidies for fossil fuels which, at $523 billion, are six times higher than subsidies for renewable energy.