Jan. 29 (Bloomberg) -- Finland supports an emergency measure by the European Union to help carbon prices rebound from a record low by temporarily withholding supply of some permits.
Finland backs a proposal from the commission, the bloc’s regulatory arm, to fix a glut in a bid to prop up prices, Magnus Cederloef, senior technical adviser at the Environment Ministry in Helsinki, said by phone today.
“However, Finland opposes permanent withdrawal of permits, which some EU countries have discussed, although no such proposal has been made,” he said.
Carbon permits for December traded at 4.06 euros ($5.46) a metric ton as of 8:58 a.m. after dropping as much as 5.5 percent to 3.95 euros, according to data from the ICE Futures Europe exchange in London.
At stake are prices in the world’s largest cap-and-trade program, which fell to a record 2.81 euros a metric ton on Jan. 24. The price of carbon permits peaked at 36.43 euros on July 1 2008, and has plunged after the financial crisis hurt industrial production and cut demand from industry for emission permits. That boosted the surplus of allowances to almost half of average annual pollution limit in the system.
To alleviate the glut, the commission has proposed to delay the sale of 900 million metric tons of permits from 2013 through 2015, releasing the allowances back to the market in 2019 and 2020. The proposal has caused rifts among governments, industries and lawmakers.
To be enacted, the EU plan to delay sales of some permits needs qualified majority support from national governments in a ballot system that favors larger countries. Spain, Italy, France and Belgium signaled last year they support the so-called backloading plan. Lithuania said last month that in principle it has nothing against the plan. The Dutch parliament called on the nation’s government to support the commission’s proposal.
The U.K. set some conditions for its support while signaling flexibility, three EU officials with knowledge of the matter said last week. Germany, which according to analysts including Trevor Sikorski at Barclays, holds the key to backloading, remains undecided. Poland is leading efforts to block the measure.
The last meeting of representatives of member states in Brussels on Jan. 25 failed to bring a breakthrough on the issue, the officials said. Many of the EU’s 27 nations did not have official positions to present, they said.
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