EU Confident on Carbon as Fix Said Likely to Win States’ Support

European Union Climate Commissioner Connie Hedegaard said she is confident that EU plans to bolster carbon prices will be enacted as policy makers realize inaction could lead to a demise of the world’s biggest carbon program.

Support from member states for the rescue plan for the EU emissions trading system is growing and more governments are likely to favor the proposal to temporarily curb oversupply, she said in an interview in Brussels today. The emergency strategy, known as backloading, needs backing from EU governments and from the European Parliament to be implemented.

“We’re getting there on the member states side; the challenge is the vote in the European Parliament,” Hedegaard said. “I’m confident that we will get through with backloading and come to what really matters. And what really matters is the discussion on more structural options.”

The commission’s proposal to help prices in the 53 billion-euro ($68 billion) carbon market rebound from record lows has divided policy makers and industry. The draft measure is likely to win the qualified majority needed for it to be approved by member states, according to three EU officials with knowledge of private talks among government representatives.

Romania, Bulgaria and Portugal, which haven’t adopted official positions on the proposed carbon fix, are likely to back the rescue plan, said the officials. The Czech Republic, which indicated in previous months that it had concerns about the proposal, is now signalling more flexibility, according to the officials, who asked not to be identified, citing policy.

More Supporters

Supporters of backloading among member states would need to muster 255 votes in favour out of 345 ballots in the EU weighted-majority system that favors larger nations. While countries including France, Italy and Spain have declared backing for the rescue plan, Germany, Europe’s biggest economy, has remained undecided. Poland, Cyprus and Greece have said they object to the measure.

“We have seen over the recent four-five weeks more member states coming out every week saying we’re in support,” Hedegaard said. “Last week it was Slovenia, it was Malta, maybe even today we will see some member states coming forward.”

The commission’s strategy is to postpone the sale of 900 million carbon allowances from 2013-2015, and return permits to the market in 2019-2020. In the first step of the backloading plan, a carbon-law change would reassert the commission’s right to decide the timing of auctions. In the second stage, governments would consider a measure setting out the details of the delay.

Law Change

The Parliament is set to discuss the law change on April 15 in Strasbourg, France, and vote on it the following day. The assembly’s environment committee backed the draft measure in a non-binding ballot in February by 35 votes to 28, with two abstentions. A majority of members from the European People’s Party, the biggest political group in the Parliament, was against the proposal. The EPP also wants to propose rejecting backloading during the plenary session next month.

Matthias Groote, a Social Democrat member of the Parliament in charge of the legislative proposal in the assembly, said earlier this month he was optimistic for the outcome of the April vote and expected to get the mandate for talks with governments about the final wording of the law change amendment.

There are “some interests that are lobbying very much to try to get rid of this system,” Hedegaard said. EU permits for delivery in December this year rose 3.3 percent to 4.77 euros a metric ton as of 2:41 p.m. on the ICE Futures Exchange in London. They slumped to a record low of 2.81 euros in January.

“The alternative is 27 different member states starting to invent their own systems, meaning we get rid of the level playing field we have in Europe on this,” she said. “I think that’d be much more of a nightmare to companies. I’m absolutely sure that common sense will prevail.”

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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