Carbon emission permits are essentially licenses to release greenhouse gases, priced in units that allow the holders to emit a ton of greenhouse gases. Because a big user of coal-burning power plants might release millions of tons of greenhouse gases a year, the higher the price for the permits, the higher the cost for polluting.

The idea behind the Emissions Trading System, a concept called cap and trade, was to create a market in allowable emission credits by putting a cap on the amount of those credits and letting companies and investors trade those rights.

But a glut of permits has meant prices have been so low that big carbon polluters have had little incentive to curtail their smokestack emissions. After the vote Tuesday, the market price of a carbon allowance, which lets a factory emit one ton of carbon, fell about 40 percent, to 2.63 euros, or $3.47, a ton. Later in the day it recovered to 3.15 euros.

“Prices will sink very low — potentially below 1 euro a ton and liquidity will dry up,” wrote Kash Burchett, another IHS analyst.

Analysts say a price of 30 euros a ton or higher would be needed to persuade companies to switch to cleaner fuels like natural gas, the main alternative to coal for producing electrical power. Natural gas is priced about three times as high in Europe as in the United States, which is benefiting from a shale gas boom.

Some European industry groups and conservative politicians on Tuesday applauded the defeat of the measure, which would most likely have put upward pressure on electricity prices and have added to the costs of manufactured goods.

“Arbitrary interventions in the carbon market would just make it more difficult for businesses to produce cost-effectively in the E.U.,” Eurochambres, which represents millions of European businesses, said in a statement after the vote.