Worse than useless Europe’s Emissions Trading Scheme (ETS) has too many carbon emission permits trading at too low a price.

Source: The Economist, January 25, 2014 Explain the conditions under which the ETS, a cap­and­trade system, would reduce the amount of carbon emissions to the efficient quantity. Use a graph of the European market for electricity to illustrate your explanation. On your graph, show the effects of having too many emission permits.