EU Told States It Expects Parliament to Back Carbon Fix in April

The European Union’s executive told EU national governments last month that it expected the bloc’s Parliament to approve in April the start of negotiations on a proposal to reduce a record glut of carbon permits.

The European Commission updated representatives of EU nations on the status of the draft measure during a meeting of climate experts from member states on Feb. 27 in Brussels, according to a summary of the gathering obtained by Bloomberg News. The proposal, which includes an amendment to the EU emissions trading law, has divided EU governments and members of the Parliament, which is next scheduled to discuss the draft measure at its plenary meeting starting on April 15.

“One member state asked for a clarification on what the European Parliament is going to do in relation to the proposal,” according to the document. “The commission explained that its understanding was that the plenary is expected to give a mandate” for negotiations with member states about the final wording of the draft measure.

The amendment to the EU emissions law is the first element of the strategy known as backloading, which assumes delaying auctions of 900 million carbon permits from 2013-2015 to 2019-2020 to help prices rebound from record lows. It needs approval from both the Parliament and member states to become binding. EU allowances for December delivery have lost 46 percent this year amid concerns that the stopgap measure to curb oversupply may fail. The contract fell 5 percent to 3.62 euros ($4.69) a metric ton on the ICE Futures Europe exchange as of 4 p.m. in London.

‘Bitter End’

A majority of members of the European People’s Party, the biggest group in the Parliament, are against backloading, arguing it undermines predictability for investors and leads to higher energy prices. The EPP will oppose it “to the bitter end,” Eija-Riitta Korhola, the group’s lead lawmaker on the draft measure, said yesterday on her Twitter Inc. account.

The EPP was unsuccessfully seeking to remove a non-binding recommendation for the commission to intervene on the carbon market in a vote on the Parliament’s energy policy report last week. The reference to carbon permit supply curbs in the report, which covers a different policy area than emissions trading, was eventually upheld by a margin of three votes.

Undecided Nations

While supporters of backloading outnumber opponents among the EU’s 27 governments, the backing is short of 255 out of 345 votes needed for the measure to pass as several nations, including Germany, remain undecided.

During the Feb. 27 meeting of the Climate Change Committee of national climate experts, three more countries expressed formal support for the carbon market rescue plan, two of them conditionally, according to the EU document.

The commission also told member states that it recommended “proceeding swiftly” with the second round of aid to clean technologies from a special carbon-permit reserve, known as NER300. The EU is due to open the contest for subsidies from the sale of 100 million permits on April 3 and will seek “to shorten the time-to-award from 25 to 15 months,” according to the document.

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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