First came the credit crunch and recession. Now there is a carbon-price slump that may undermine one of the main ways governments have chosen to combat global warming. Since 2005, the European Union has pioneered a trading scheme for greenhouse gas emissions from industries, including carbon dioxide - the main gas blamed by many scientists for warming the planet. The scheme imposes a cap on emissions from factories and power plants that rely on fossil fuels in the 27-nation bloc. It uses a fixed quota of emissions permits.
Firms that lower their emissions by saving energy or turning to non-fossil-fuel sources like solar and wind power can sell their permits to less-efficient companies. The programme was designed to be a major component of Europe's plan to deliver a 20 per cent cut in emissions by 2020 over 1990 levels, making it the global leader in fighting climate change.
Earlier this month, Australia confirmed that it would follow the EU. Canberra unveiled legislation the government hopes to pass by the middle of this year establishing a scheme to reduce carbon pollution that, in some respects, is more comprehensive than Europe's.
Energy-intensive Australia committed itself to reduce emissions by 5 per cent of 2000 levels by 2020, but has said it will back a 15 per cent cut by then if other rich nations promise to make similar moves at a climate change summit to be convened by the UN in Copenhagen in December.
Meanwhile, the United States, which rejected carbon-capping under the Bush administration on the grounds that it would hurt the economy, now aims to pass a federal cap-and-trade law later this year.
Whether these initiatives become an effective global mechanism for reducing emissions depends on the willingness of other big energy users and industrial polluters to adopt similar schemes. Among them are China, Japan, India and South Korea. Most developing countries oppose measures that would impose extra costs on their economies. However, some critics say developed-economy carbon trading is fundamentally flawed and that, although it was intended to cut emissions by making polluters pay, it is now removing that incentive.
The EU's emissions trading scheme got off to a controversial start when prices plummeted after some governments issued too many permits. No sooner had this problem been fixed, when the economic slowdown struck.