EU Parliament’s Groote Says He’s Optimistic on Carbon Deal

The European Union’s proposal to alleviate a record oversupply on the carbon market is likely to win support from the European Parliament in April after an option of a fast-track deal was scrapped, a senior EU lawmaker said.

The 754-seat Parliament is due to initially discuss the future of the draft emission-market rescue plan during its April session, offering members from various political groups in the assembly a chance to iron out a common solution, according to Matthias Groote, who oversees the measure. Groote, a German Social Democrat, decided yesterday to avoid accelerated talks with EU member states before the plenary meeting.

“I’m optimistic about the outcome because we have more room to find a good compromise with all political groups,” Groote said in an interview in Brussels. “Some decisions need more time and it was better to give up a fast-track approach and seek a solution that would be satisfying for more members.”

EU carbon allowances dropped to an all-time low of 2.81 euros a metric ton last month as the economic crisis curbed demand for pollution rights, leading to a record oversupply in the world’s biggest cap-and-trade market. The EU proposal to temporarily reduce the glut by delaying auctions of some permits, known as backloading, has divided governments, members of the European Parliament and industry.

Whole Assembly

While the Parliament’s environment committee last week recommended the whole assembly support backloading, in a separate vote the panel delayed a decision on whether to authorize Groote to start talks with governments on the final wording of the proposal. Groote’s decision yesterday to refer the issue to the plenary followed calls by the European People’s Party, the biggest group in the EU Parliament, that the backloading plan be considered by the whole assembly first due to its complexity.

The EPP was split on the need to intervene in the carbon market, according to the results of the Feb. 19 vote in the environment committee. Eija-Riitta Korhola, the group’s lead lawmaker on the draft measure, said yesterday that majority of its members oppose the proposal because it threatens to undermine industry competitiveness and raise energy prices.

Peter Liese, a German EPP member who voted in favor of backloading last week, said today in an interview that he was “optimistic” that supporters of the measure “will have good arguments and will convince the majority of the Parliament.” The assembly is considering an amendment to the EU emissions trading law that would enable a separate draft measure to delay sales of 900 million carbon allowances from 2013-2015 to 2019-2020.

Final Approval

The Parliament could give its final approval to the legal change by June should a majority of members back it in the initial plenary debate, according to lawmaker Bas Eickhout. The backloading strategy was drafted by the European Commission, the 27-nation EU’s regulatory arm.

“If there is consent for potential new compromise amendments in April, then negotiations with member states can start immediately and will likely be very short, paving the way for a final approval by the June plenary,’’ Eickhout said in an interview today.

The pace of talks on backloading will also depend on EU governments, whose approval is needed for the plan to come into force, according Eickhout, a Dutch member of the Greens group in the Parliament. While there are more supporters than opponents of the proposal among EU member states, the backing is short of a qualified majority as several nations including Germany remain undecided, three EU officials with knowledge of the matter said last month.

“If Germany moves this week, then we can even try to move the plenary discussion to March,” Eickhout said. “If they stay on the fence, then plenary is unpredictable because the lobbying of energy-intensive industry is so intensive.”

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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