The European Parliament’s environment committee agreed to accelerate the adoption of a rescue plan for the bloc’s emissions market, which the European Commission wants to start as soon as possible.
Carbon prices rose as much as 3.6 percent after the panel voted 43 to 13 to shorten the measure’s usual three-month scrutiny period in the Parliament. The recommendation now needs approval from all heads of the assembly’s other committees before it goes to a plenary, which can end the obligatory evaluation before an April deadline.
“I have already sent a letter to the Parliament’s committee chairs,” Matthias Groote, the head of the environment panel and the lead lawmaker on the plan, said in an interview in Brussels today. It isn’t yet clear when the Conference of Committee Chairs will decide on the matter, he said.
The rescue plan involves delaying the sale of some permits to help prices rebound from levels the commission says are too low to discourage burning fossil fuels and spur investment in renewable energy. The cost of emitting one metric ton of carbon-dioxide has plunged 81 percent since 2008 amid a surplus of allowances exacerbated by the economic slowdown.
EU carbon permits for delivery in December rose to as high as 5.77 euros a ton before trading at 5.73 euros on the ICE Futures Europe exchange as of 12:47 a.m. in London. The benchmark contract fell to a record low of 2.46 euros in April.
The market fix, known as backloading, would delay the auction of 900 million carbon permits in 2014-16 until the end of the decade. For the fix to be enacted, the Parliament and EU governments must finish their scrutiny. The commission, the EU’s regulatory arm, then needs about three weeks to adopt the plan and notify market participants of the new auction calendar.
Should backloading begin in March, the EU would postpone 400 million permits this year, according to the draft regulation. If the evaluation isn’t accelerated and backloading begins in the second quarter, 300 million allowances would be delayed at government auctions.
“I still see an 80-percent chance of getting it through in time to backload 400 million allowances this year,” said Matteo Mazzoni, an analyst at Bologna, Italy-based Nomisma Energia srl, an adviser to energy companies, governments and banks. “Today’s vote was highly expected. Much less granted is the support of all the other committees.”
The environment committee rejected today two draft resolutions to block backloading. Some members of the panel and the Parliament’s industry committee wanted to prevent the temporary supply curbs on the grounds that the market intervention was breaching EU emissions trading law.
The Conference of Committee Chairs now needs to decide whether to approve Groote’s request for a shorter scrutiny period. Such a decision needs to be unanimous.
“There are still quite a few steps to pass and if any if these fails, or even gets delayed, we will see 300 million tons being backloaded in 2014,” said Bostjan Bandelj, a director at trading company Belektron in Llubljana, Slovenia. “The industry committee vote showed that there is still desire among some parliamentarians to block or delay backloading implementation. I give the 400-million scenario only a 25 percent chance.”
Once announced in plenary, a recommendation to shorten the scrutiny period is deemed to have been approved if there’s no opposition within 24 hours, according to the assembly’s rules. Objections can be raised by a political group or at least 40 members of the Parliament. That would require putting the recommendation to a vote in which a simple majority in favor is sufficient for approval.
“It will most likely be for a decision by the second plenary in February,” Groote said last week. Next month’s first session starts on Feb. 3 and the second is on Feb. 24.