The European Union’s conservatives group raised an objection in the European Parliament’s industry committee to fast-tracking of a carbon-market fix, triggering the biggest decline in emission prices in nine trading sessions.
The European Conservatives and Reformist group will try to delay the measure, which aims to temporarily curb supply in the EU greenhouse-gas market, according to Konrad Szymanski, a Polish member of the group. The market fix, known as backloading, was approved by representatives of EU governments on Jan. 8 and is undergoing scrutiny by member states and the Parliament before entering into force.
“We want to continue our opposition against backloading and we will use all possibilities against this unnecessary measure,” Szymanski, who is a member of the industry committee, said in an interview in Brussels today.
The carbon-market rescue plan envisages delaying the sale of 900 million permits to help prices rebound from levels the European Commission says are too low to discourage burning fossil fuels and spur investment in renewable energy. The cost of emitting one metric ton of carbon-dioxide has plunged 81 percent since 2008 amid a surplus of allowances exacerbated by the economic slowdown.
EU carbon permits fell as much as 4 percent to 5.55 euros a metric ton today and traded 1.9 percent lower at 5.67 euros on the ICE Futures Europe exchange as of 3:08 p.m. in London.
The Parliament’s environment committee, which leads work on the regulation in the assembly, rejected attempts to block backloading yesterday. It also approved a request by the commission, the EU regulatory arm, to shorten the scrutiny period from the regular three months. The recommendation to accelerate the adoption of the measure has been sent to the heads of other committees for a decision.
Should the evaluation period be shortened from its April deadline and the backloading start in March, the EU will delay sales of 400 million carbon permits this year. If the fix begins in the second quarter, 300 million allowances will be postponed at government auctions, according to the regulation.
To derail the proposal to fast-track the adoption of backloading, the ECR will need support from other political groups in the industry committee, known as ITRE, under the Parliament’s rules. Should a majority of coordinators representing those groups side with the conservatists, the committee’s chair will get the mandate to object to shorter scrutiny at the Conference of Committee Chairs. An objection by one chair is enough to prevent fast-track approval.
Political groups have until 6 p.m. in Strasbourg on Feb. 3 to raise objections in the industry committee, Szymanski said. His committee, which has an advisory role on backloading, voted last week to reject the market fix on the grounds that it breaches EU emissions-trading law. Its recommendation was overturned by the environment panel.
In a July plenary vote on backloading, a majority of members from the Socialists and Democrats group and from the Alliance of Liberals and Democrats for Europe were in favor of backloading. All members of the Greens group present during the vote supported it.
The Europe of Freedom and Democracy group and the ECR were the strongest opponents of the carbon-market intervention. The GUE-NGL group was split and members of the European People’s Party, the largest political group in the Parliament, voted 170 to 59, with 25 abstentions, against the fix.
The EPP has three coordinators in the industry committee and the other political groups have one apiece, according to a Parliament spokesperson.
The heads of parliamentary panels will meet next on Tuesday during a plenary session in Strasbourg and the recommendation for a fast-track approval is on their agenda. They can raise objections to a shorter scrutiny period at the latest during that meeting.
“I think there will be political pressure on committee chairs to make a decision as soon as possible,” Szymanski said.
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.
Representatives of EU governments will give their initial approval to end the scrutiny of the backloading measure on Feb. 5, the EU presidency said earlier this week. Following the end of the evaluation by the Parliament and member states, the commission will need about three weeks to adopt the regulation and notify market participants of the new auction calendar.
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