The European Parliament’s industry committee is yet to decide whether to block a faster start of a carbon-market fix should its objection to the measure be denied by the environment panel, according to a Parliament official.
The environment committee is scheduled to vote on the industry panel’s recommendation to reject the emissions-market rescue plan on Jan. 30. If the recommendation is overturned the industry panel’s chair will need to consult coordinators from political groups on whether to object to plans by Matthias Groote, the head of the environment committee, to shorten the scrutiny period of the market fix, said the official, who declined to be identified, citing policy.
The rescue plan for the carbon market, known as backloading, would help prices rebound from levels that the commission says are too low to encourage utilities to shift from coal to less-polluting natural gas and to spur investment in renewable energy. The cost of emitting one metric ton of carbon-dioxide fell to an all-time low of 2.46 euros ($3.21) last April amid a record glut of permits.
EU carbon permits for delivery in December rose 2.1 percent to 5.45 euros a ton on the ICE Futures Europe exchange today. That’s the highest close since Oct. 16.
Backloading, which would temporarily curb supply of allowances at auctions, needs to get final clearance from the Parliament and national governments to be implemented. The European Commission, the EU’s regulatory arm, asked policy makers earlier this month to accelerate the scrutiny, which would normally take until April, to enable the start of the plan in the first quarter.
The industry committee, which has an advisory role on the market fix, voted last week to reject the measure, saying it undermines the market nature of the EU emissions-trading system. The environment panel, which leads the parliamentary work on the proposed carbon-market regulation, will decide on the recommendation from the industry panel later this week.
A rejection of the industry committee’s recommendation would mean the panel can’t object to the substance of the backloading regulation in further stages of the regulatory process, according to the Parliament official.
A verdict to overrule objections to backloading would pave the way for Groote to ask the whole Parliament to shorten the scrutiny period of the market fix from the regular three months.
“It will most likely be for a decision by the second plenary in February,” Groote told Bloomberg News in an interview last week. The second session starts on Feb. 24.
In order for such a recommendation to be put on the agenda of the plenary, Groote’s request for a fast-track evaluation needs to be approved by the heads of all committees in the Parliament before it is put on the agenda of the plenary. The head of the industry panel will decide whether to object after consulting coordinators from political groups, the Parliament official said today.
Once announced in plenary, a recommendation to shorten the scrutiny period is deemed to have been approved if there’s no opposition within 24 hours, according to the assembly’s rules. Objections can be raised by a political group or at least 40 members of the Parliament. That would require putting the recommendation to a vote in which a simple majority in favor is sufficient for approval.
The commission needs about three weeks after the Parliament and governments end their scrutiny to formally adopt the backloading regulation and notify participants in the emissions market of a new auction calendar.
Should backloading begin in March, the EU would delay the sales of 400 million carbon permits this year, according to the draft regulation. If the evaluation is not accelerated and backloading begins in the second quarter, 300 million allowances would be delayed at auctions.
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