One expects an estate agent to overprice a property so there is room to be beaten down. But it is depressing to see European governments do the same with their carbon emission quotas. The European Commission is therefore right to accept no nonsense, and insist on lower targets, because the credibility of carbon trading is now at stake.

Under the European Union's Emissions Trading Scheme, the first phase of which runs from 2005-2007, national governments must cap the amount of carbon that industries such as steel and electricity can produce. Within the cap, and across Europe, polluters can then trade the right to emit carbon. Yesterday the Commission told nine out of 10 governments to cut their pro- posed limits for the second phase, from 2008-2012, by an average of 7 per cent.