EU Parliament to Start on Carbon Fix in Fall, La Via Says

The European Parliament will start discussions “in the autumn” on a proposal to help boost carbon prices by introducing automatic supply controls, said the chair of the assembly’s environment committee Giovanni La Via.

The panel, which leads parliamentary work on emissions-trading laws, will scrutinize the draft “carefully and comprehensively” before a vote, La Via said by e-mail. The fix for the European Union emissions-trading system was put forward by the European Commission in January and aims to alleviate a record glut of pollution permits by introducing a reserve to which excess allowances would be transferred.

“We are at a very early stage in relation to this proposal,” La Via said. “The European Parliament has not yet begun its first-reading procedure.”

The plan to create a market stability reserve for the EU cap-and trade-program needs a qualified majority of government votes and a majority support in the Parliament to be enacted. The fix was proposed after an excess of permits in the emissions-trading system swelled to above 2.1 billion allowances last year, more than the annual pollution cap in the program, according to commission estimates. It would follow an emergency measure adopted earlier this year under which 900 million carbon permits would be delayed at auctions in 2014-2016, a process known as backloading.

Oversupply

Coupled with an economic crisis and inflows of cheaper imported emission credits, the oversupply in the ETS helped drive the price of EU carbon allowances to a record low of 2.46 euros a ton in April last year. The supply of permits will be reduced if there is an accumulated surplus of at least 833 million metric tons, according to the market stability reserve proposal. If the surplus fell below 400 million tons, the EU would begin returning allowances to the market from the reserve.

The supply curbs or injections would begin in 2021, according to the draft by the commission. Germany is seeking to bring the start forward to 2017, while Poland says an early entry into force of the measure would breach EU laws. Governments hold their discussion in the EU Council, whose meetings are chaired by the Italian presidency in the second half of this year.

“Member states are of course at the same time studying the proposal in the Council and, like the Parliament, will have to look at all options carefully,” La Via said. “I look forward to discussions with the Council, its Presidency, and individual member states in the months ahead.”

Stability Reserve

The next step on the draft carbon-market fix is a decision by the European People’s Party, the biggest political group in the EU Parliament, to choose a rapporteur, or a member overseeing the proposal during the legislative work, according to La Via. Discussions on that matter are “ongoing,” said La Via, an Italian member of the EPP in the European assembly since 2009. The EPP set an internal deadline until noon today for candidates to apply for the position of the rapporteur.

The proposal to introduce the market stability reserve was presented as a part of a package on energy and climate policies for the next decade, under which the commission is seeking a tighter target for greenhouse-gas reductions. The bloc should accelerate the pace of cutting carbon and set a 40 percent goal for 2030 compared with 20 percent by 2020 from 1990 levels, the commission proposed.

The EU Parliament has backed a 40 percent emissions-reduction goal, 40 percent energy-efficiency target and an objective to boost the share of renewable energy by 2030 in a non-binding resolution earlier this year. The 28-nations bloc’s leaders aim to reach a political deal by October about the framework for the next decade. Member states are divided on the strategy.

‘Fair Compromise’

“Of course there are different views on how tight the goals should be, and on this regard I think that we have to confront the various positions and try to find a fair compromise,” La Via said. “One possibility to implement the three targets could be by means of individual national targets that take into account the individual situation and potential of each member state, but the debate will soon re-start.”

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Andrew Clapham, Peter Chapman

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