The European Parliament set April 15 as the indicative date for a plenary vote on an amendment to the emissions trading law that would enable curtailing an oversupply of pollution permits.
The full assembly would decide on the legal change two months after a vote in its environment committee, according to the timeline in the Parliament’s legislative database. The amendment is the first step in a carbon-permit “backloading” strategy that was proposed by the European Commission in July and aims to delay sales of some emission allowances as of 2013 to help prices rebound from a record in April.
“It is looking increasingly likely that no backloading will happen before 2014,” Konrad Hanschmidt, a London-based analyst at Bloomberg New Energy Finance, said by e-mail.
At stake are prices in the world’s largest cap-and-trade program, which fell to a record 5.99 euros ($7.77) in April after the financial crisis hurt industrial production and cut demand from industry for emission permits. That boosted the glut of allowances to almost a half of the average annual pollution limit in the system.
The amendment to the emissions trading law also involves national governments, which would need to agree a final version of the amendment with the parliament before the plenary vote. EU ministers could then officially approve the legal change at one of their meetings following the vote in the parliament.
The amendment proposed by the commission consists of one sentence and reasserts the EU regulator’s right to decide about the timing of auctions to avoid legal uncertainty. While the region’s governments need “some clarifications,” their backing for the commission’s plan is possible, Theodoulos Mesimeris, an official at Cyprus’s Environment Ministry said on Oct. 5. Cyprus holds the EU six-month rotating presidency until the end of this year before Ireland takes over in January.
The start of carbon-permit supply curbs will also depend on a separate measure to “backload” allowances, whose outline is being considered by member states in a parallel process in the EU Climate Change Committee, composed of climate experts from national governments.
The commission is yet to put forward an official proposal and specify a number of permits to be delayed.
At the first meeting of the committee on the draft plan last month governments offered “not many” opinions on the volumes of carbon permits they think could be backloaded, according to the minutes of the gathering. A number of representatives “emphasized” that they want to see a report on long-term options to strengthen the EU program before deciding on their final position, the document showed.
“Some member states’ and the parliament’s calls to clearly set out the longer-term structural measures could further lengthen the negotiations,” Hanschmidt said. “This could also delay the critical Climate Change Committee vote, which the commission wants to have as early as possible.”
EU Climate Commissioner Connie Hedegaard said in July, when the draft auction delay plan was submitted to member states, that she aimed for a decision on the backloading measure before the end of this year. The commission is planning to adopt the report on long-term carbon market options on Nov. 14, according to an EU document obtained by Bloomberg.
The Climate Change Committee is scheduled to meet on Oct. 17, Nov. 15 and Dec. 13. It is technically possible that it could vote on the backloading measure before the parliament’s decision on the amendment to the emissions law, an EU official said on Oct. 5. The start of a mandatory three-month scrutiny period that follows a vote in the committee would then be delayed until the legal change is approved, the official said.