Dutch Vote Boosts Pressure to Support Carbon Fix, Lawmaker Says

The Dutch government will be under pressure to endorse planned European Union curbs on supply in the carbon market after a motion by the country’s parliament yesterday, an EU lawmaker from the Netherlands said.

The parliament in the Hague called on the government to support a strategy proposed by the European Commission to delay auctions of some carbon permits as of 2013 and help prices recover, a plan the outgoing environment minister said he was unlikely to support. The vote means that the Netherlands, where elections took place last month, is now unlikely to block the so-called backloading proposal, according to Bas Eickhout, a Dutch member of the European Parliament.

“It’s a significant move,” Eickhout, a member of the Green group in the EU assembly, said in a phone interview from Brussels today. “I expect the new government to follow the parliament’s line. Theoretically it could ignore the motion but by objecting to the proposal the minister would risk being voted down.”

At stake is the price of emission permits in the world’s biggest cap-and-trade system after they plunged to a record of 5.99 euros ($7.76) in April as the economic crisis hurt industrial output, boosting the surplus of allowances to almost half of the average annual pollution limit in the 27-nation EU.

The strategy proposed by the commission, the EU’s regulatory arm, would see fewer permits being auctioned by member states at the beginning of the next trading period that starts in 2013, a move that would help alleviate the oversupply. The postponed allowances would be returned to the market at a later stage of the so-called Phase 3 that ends in 2020.

Backloading Measure

The Dutch environment ministry said in September the country will probably not support the backloading measure as it could lead to temporarily higher costs for companies in the Netherlands that compete internationally. That could indirectly be a disadvantage for the Dutch economy, the euro area’s fifth- largest, the ministry said.

The Liberal Party of caretaker Prime Minister Mark Rutte is in talks to form a new government with the Labor party led by a former Greenpeace activist, Diederik Samsom. They may reach an agreement as soon as this week, NOS television reported on Oct. 22, citing unidentified people with knowledge of the situation.

The motion calling on the government to endorse backloading and deeper changes to the ETS was supported by 94 lawmakers in the 150-seat parliament yesterday. The Liberals, which have 41 votes, and the Freedom Party led by Geert Wilders, which won 15 seats in the elections, opposed the resolution.

‘Increasing Pressure’

“There’s an increasing pressure on the government to change its position,” Eickhout said.

The proposal to delay some auctions of carbon permits in the EU emissions trading system, or the ETS, will be considered in the so-called comitology procedure, in which a measure put forward by the commission needs qualified-majority support from representatives of national governments to pass. The EU strategy to curb oversupply also includes a draft amendment to the bloc’s emissions trading law to reassert the commission’s right to decide about the timing of auctions.

The commission is planning to propose a specific number of allowances to be postponed on Nov. 14 and aims for a vote in the committee before the end of this year. The Netherlands has 13 out of 345 votes in the EU’s weighted ballot system that favors larger countries. A blocking minority requires 91 votes.

Most member states are still scrutinizing the commission’s proposal after they voiced reservations about the draft law change at two meetings in September, an EU presidency official said on Sept. 24. Poland, which has repeatedly said it opposes any measure to “manipulate” the ETS, has 27 votes and Slovakia, which also signaled resistance, has seven.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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