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Germany May Abstain in EU Carbon Vote as Ministers Clash

Germany’s economy and environment ministers are at odds over whether to back a European Union plan to curb oversupply of carbon permits, raising uncertainty over the fate of the measure aimed at supporting prices in the world’s biggest emission market.

Environment Minister Peter Altmaier told reporters today he supports a proposal by the European Commission to delay auctions of 900 million carbon permits starting in 2013 after the price of allowances sank to a record in April. Economy Minister Philipp Roesler opposes such a move, saying it could threaten Germany’s industry.

“If the environment minister is to insist on his position,” then Germany may abstain in any voting and therefore fail to back the proposal, Roesler’s ministry said today in an e-mailed statement sent after Altmaier made his comments.

At stake is the price of emission permits in the world’s biggest cap-and-trade system after they plunged to a record low of 5.99 euros ($7.75 million) in April as the economic crisis hurt industrial output. The downturn boosted the surplus of allowances to almost half of the average annual pollution limit in the 27-nation EU.

EU Climate Commissioner Connie Hedegaard has said she aims for a decision on the measure before the end of this year. The next meeting of the Climate Change Committee is scheduled for next month.

More Risk

“Until the Commission sends out an agenda for the December meeting to member states, any opinion about whether there will be a vote or not can only be speculation,” Matthew Cowie, an analyst at Bloomberg New Energy Finance in London, said today in an e-mail. “If the Commission can see that a major member state like Germany is still undecided, scheduling a vote may be taking on more risk than they are game for.”

Altmaier said it’s “absolutely necessary” that Germany backs Hedegaard’s proposal as it would strengthen a system that is meant to incentivize investments in low-carbon technologies and may be copied by nations including China, Australia and Canada.

“This will only be the case if the Europeans can prove that they can effectively advance climate protection with their emissions trading,” Altmaier said. “That’s not the case at the moment.”

Draft Measure

The draft measure to strengthen the region’s cap-and-trade system needs qualified-majority from member states in the EU’s weighted ballot system that favors larger countries. Representatives of national governments failed to reach a breakthrough at their Nov. 15 meeting on the proposal to curb a glut of permits.

To pass, the so-called backloading proposal will need 255 out of 345 votes in the EU Climate Change Committee, composed of experts from national governments. Germany has 29 votes while Poland, which has repeatedly said it will oppose the draft measure, has 27 votes. A blocking minority requires 91 votes.

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