EU Carbon Fix Set for Fast-Track Assembly Approval, Groote SaysEwa Krukowska
The European Parliament is set to back speeding up the approval of a carbon market rescue plan, allowing intervention aimed at bolstering prices as soon as this quarter, according to the proposal’s lead lawmaker.
The 766-member assembly is expected to vote in favor of fast-tracking the measure to temporarily curb the supply of pollution permits, Matthias Groote, the German assembly member shepherding the plan through Parliament, said in an interview. A simple majority in favor is sufficient for approval at the ballot at noon today in Strasbourg, France.
The rescue proposal involves delaying the sale of 900 million pollution permits, or nearly half the annual limit in the European Union’s emissions trading system, to help prices rebound from levels the bloc’s regulator says fail to discourage burning fossil fuels. The cost of discharging one metric ton of carbon-dioxide has plunged 79 percent since 2008 amid a glut of allowances exacerbated by the economic slowdown.
A positive vote “will allow a quick beginning to the withholding of certificates, and will strengthen the market and rebuild investors’ trust,” Groote said yesterday.
The glut-fix measure needs to be cleared by the Parliament and the EU Council of national governments before it enters into force. The European Commission, the EU’s regulatory arm, asked the two institutions to shorten the scrutiny period that would normally end in April.
The Europe of Freedom and Democracy group and the European Conservatives and Reformists group, which together have 88 seats in the Parliament, oppose accelerating the carbon market plan, which they say boosts industry costs.
The EFD are seeking to get the fast-track vote put back until the next plenary session starting Feb. 24, Zbigniew Ziobro, a Polish member of the group, said yesterday in an interview. The EFD plan to ask for the delay at a meeting of the presidents of political groups before today’s vote.
“If we don’t win approval from the presidents, we will make a floor request during the plenary to postpone the ballot, hoping that the request will be put to a vote,” Ziobro said.
The carbon market plan involves withholding permits through 2016 and reintroducing, or backloading, 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.
Carbon prices will jump to 7.75 euros ($10.50) a metric ton by the end of the year amid the planned supply curbs, according to the median of nine analyst and trader estimates compiled by Bloomberg News last month. EU permits for delivery in December rose 0.2 percent to 6.17 euros on ICE Futures Europe in London.
Legislation enabling the market intervention was already approved by the whole Parliament and the EU governments in December, after more than 18 months of political wrangling.
In a parallel scrutiny procedure in the Council, EU government representatives gave their initial approval to fast-track adoption yesterday. The measure is now tentatively scheduled to receive formal sign-off from ministers on Feb. 24, according to an EU official with knowledge of the matter. The final approval won’t need a vote or discussion, said the official, who asked not to be identified, citing policy.
Following the formal end of the evaluation by the Parliament and member states, the commission would typically need several days to publish the measure in the Official Journal, the publication of record for the EU. It also needs to give market participants two-weeks notice of the new auction calendar. It isn’t clear if that period can be shortened.