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Exxon’s Loss In a Court Case in Europe May Be a Gain for Carbon Market

Ruling is seen reducing the supply of emissions allowances, adding fuel to a rally.

Smoke stacks and cooling towers of the RWE owned Neurath coal power plant near Grevenbroich, Germany.

Smoke stacks and cooling towers of the RWE owned Neurath coal power plant near Grevenbroich, Germany.

Photographer: WOLFGANG VON BRAUCHITSCH
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Exxon Mobil Corp.’s loss in a court case in Europe may translate into a gain for carbon prices in the continent’s emissions trading system.

The European Union’s Court of Justice ruled that part of Exxon’s natural gas processing plant in Germany should be classified as an electricity generator, a decision that could result in a cut to its allocation of free pollution rights. Since 2013, utilities have to buy permits to pump out carbon dioxide while other industries get some or all of theirs for free.