The European Parliament will decide on Feb. 6 whether to speed up the start of a measure to prop up emissions prices after the assembly’s smallest group raised an objection to fast-tracking the proposal.
The Europe of Freedom and Democracy group, which has 31 members out of a total 766 Parliament seats, opposes the carbon market rescue plan because it boosts industry costs, its member Zbigniew Ziobro said today. Political groups or a minimum of 40 Parliament members have until noon tomorrow in Strasbourg, France, to lodge objections to shortening the usual three-month approval process for the emissions plan.
The draft rescue plan envisages delaying, or backloading, the sale of some permits until the end of the decade to help prices rebound from near record-lows, which the European Commission says fail to encourage a shift to renewable energy and low-emission technologies. At stake in the vote is how many permits will be postponed at government auctions this year with more delayed if the intervention starts before April.
“The purpose of backloading is to boost the price of carbon permits and that will lead to higher production costs for companies,” Ziobro said in an interview in Brussels. “We are fundamentally against it and by raising the objection we want to give other members a chance to show if they care for European businesses. I asked for a roll-call vote on that.”
A simple majority in favor of the fast-track recommendation at the plenary vote is sufficient for approval.
Should the EFD find enough allies to block the fast-track proposal, it will then seek to prevent backloading from entering into force, according to Ziobro. In the next step, just before the end of the regular three-month scrutiny period, it would raise an objection to the substance of the market fix, forcing another plenary vote, he said.
Representatives of EU governments will give their initial approval to end the scrutiny of the backloading measure on Feb. 5, the EU presidency said last month. Following the end of the evaluation by the Parliament and member states, the commission will need about three weeks to adopt the regulation and notify market participants of the new auction calendar.
EU carbon for delivery in December fell as much as 0.9 percent to 5.86 euros ($7.91) a metric ton today after Ziobro’s comments, reversing a climb to a one-year high of 6.11 euros. The contracts were trading up 0.5 percent at 5.94 euros a ton on the ICE Futures Europe exchange as of 4:23 p.m. in London.
Backloading involves withholding 900 million permits through 2016 and reintroducing them to the market in 2019-20. The proposal is to postpone 400 million this year if backloading starts in the first quarter, or 300 million if it begins after March, according to the commission.