EU Must Avoid Short-Term CO2-Supply Fix, BusinessEurope Says

The European Union should start a debate about 2030 carbon-reduction targets and avoid short-term tools to curb the supply of permits in its cap-and-trade system, said BusinessEurope, a Brussels-based employers’ federation.

The European Commission, the EU regulatory arm, is considering a review of the carbon-permit auctioning rules to postpone some sales of allowances in the early phase of the next trading period in the emissions market that runs from 2013 to 2020. That would aim to help carbon prices recover after they slumped to a record low earlier this year on oversupply.

BusinessEurope supports the “central role” played by the emissions trading system, or ETS, and called on the EU to begin discussions about post-2020 emission-reduction trajectory as soon as possible, according to a letter to European Commission President Jose Barroso e-mailed today.

“Prior to this longer-term view being developed and accepted, short-term measures such as changes to the ETS auctioning regulation to withhold allowances must be avoided as these would interfere with a more constructive discussion on how to achieve a systemic solution,” said the lobby, representing more than 20 million companies in 35 European countries.

Measures of such importance can’t be implemented without a dialogue with companies, policy makers, industry associations and non-governmental organizations, according to BusinessEurope.

“Pre-emptive short-term measures would create a precedent, resulting in greater uncertainty, which has to be avoided, and could have major repercussions for EU industry, which is already under strain from the economic crisis,” it said.

EU Climate Commissioner Connie Hedegaard reiterated yesterday she’s aiming to present the auction-delay proposal and a report on long-term structural options to improve the ETS before the end of July.

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