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Friday, 06 December 2013

Coreper endorses backloading of carbon permits

European Union (EU) diplomats  and the Committee of Permanent Representatives (Coreper) approved, on 8 November, the proposal delay the sale of 900 million tonnes of carbon permits until later this decade in order to prop up carbon prices in the bloc's Emissions Trading Scheme (ETS) under the EU’s Emissions Trading System (ETS). They gave the Lithuanian Presidency a mandate to negotiate with the European Parliament, just days after Berlin confirmed its support for the measure on 4 November.
Member states voted nearly unanimously in favour of the backloading of ETS allowances: only Poland and Cyprus did not support the proposal. The matter had been at a stalemate since 3 July, when the EP voted in favour, but with conditions. The support of Germany and Spain broke the stranglehold.
The Presidency will be contacting the EP very shortly: discussions could go quite quickly and informally as Coreper decided to accept the only amendment proposed by the EP. “There is an urgent need to push up the price of carbon and reassure markets about the EU’s determination and capacity to make the ETS work correctly,” observed Lithuanian Ambassador Arunas Vinciunas.
The final text could go to the parliament's environment committee before being sent to the full parliament for a final vote, tentatively scheduled for December 10.Member states in the EU Council of ministers would also need formally to approve the final text, likely either in their next Environment Council meeting on December 13 or at full EU Council talks on December 18 or 19.
The Commission wants to raise the price of allowances in the EU ETS, now below 5 euros per ton, to incentivize companies to cut their greenhouse gas emissions.  “The measure will be used only once. It is expected to bring the price of a tonne of CO 2 to between €8 and €12,” said an EU source. The market reacted immediately: the price of a tonne of CO 2 rose to €4.88, still 30% less than at the start of the year and still a long way from the ideal price of €24 per tonne. But the tendency seems reversed at last. That is a positive signal in the run-up to the global climate conference, opening on 11 November in Warsaw.
The EU ETS is a cornerstone of the European Union's policy to combat climate change and its key tool for reducing industrial greenhouse gas emissions cost-effectively. The first - and still by far the biggest - international system for trading greenhouse gas emission allowances, the EU ETS covers more than 11,000 power stations and industrial plants in 31 countries, as well as airlines.

Source: Europolitics.info, EurActiv, Reuters