A European Parliament committee voted Tuesday to lower the number of carbon emission allowances from 2013 onward in an effort to save Europe's cap-and-trade system.
The Parliament's environment committee narrowly voted to reduce the number of allowances sold in auctions as well as those given out for free, said Peter Liese, a committee member from the center-right European People's Party.
The recent sharp drop in prices for carbon allowances is eliminating financial incentives for industries to reduce their greenhouse gas emissions, with some analysts warning the EU's main tool in the fight against climate change may fail.
Reducing the number of allowances would boost their price, which has tumbled from around euro14 ($18.25) at the beginning of the year to just euro7 ($9.13).
As the European economy risks falling back into recession, many industries, such as power plants and cement factories, expect to produce fewer emissions, which has weighed on the price of allowances. One emission allowance, or credit, represents 1 ton of CO2 emissions.
Last week, several big companies, including oil company Royal Dutch Shell PLC, Philips Electronics NV and Tesco PLC, sent a letter to the European Commission urging action to prop up carbon prices.
However, the vote in the environment committee is only the first step in a long procedure that risks being blocked by nations trying to protect their own industries.
Isaac Valero Ladron, a spokesman for the EU's Climate Action Commissioner Connie Hedegaard, said there were no immediate plans to reduce the number of carbon allowances.
"I don't think we're there yet," Valero Ladron said.
(This version CORRECTS name of lawmaker.)