EU Nations CO2-Fix Replies Generally Positive, Italy Says

European Union governments are “generally postive” about a proposal to create a carbon-market stability reserve, the Italian presidency of EU said.

The plan, drafted by the European Commission, to create a fix for the EU emissions-trading system to help alleviate a record surplus needs a qualified majority of government votes and a majority support in the Parliament to be enacted.

“Some member states see the market stability reserve as a first step of the more comprehensive ETS reform that will be needed to implement the 2030 Framework,” the Italian presidency said in an e-mailed response to questions from Bloomberg News. “This also means that further proposals or positions might be put forward in the next weeks.”

The fix was proposed after an excess of permits in the emissions-trading system swelled to above 2.1 billion allowances last year, more than the annual pollution cap in the program, according to commission estimates. It would follow an emergency measure adopted earlier this year under which 900 million carbon permits would be delayed at auctions in 2014-2016, a process known as backloading.

“Various proposals have been put forward so far” by member states, the presidency said. “They mostly concern the entry into operations of the reserve (in phase three or in phase four of the EU ETS) and the parameters for its functioning, such as the ‘speed’ of the mechanism. Several member states are still examining these options and some feel that it’s difficult to take a final position before the European Council.”

Stability Reserve

The supply curbs or injections under the carbon-market stability reserve would begin in 2021, according to the draft by the commission. Germany is seeking to bring the start forward to 2018, while Poland opposes any intervention in the carbon market and says an early entry into force of the measure would breach EU laws. Governments hold their discussions in the EU Council, whose meetings are chaired by the Italian presidency in the second half of this year.

The presidency said it is “well aware” that EU nations differed on the proposal during the talks. “However, in our understanding, there is no such thing as a homogeneous ‘bloc’ in favor or against the proposal,” the presidency said.

“It is a bit premature to draw conclusions on the existence or non-existence of a blocking minority especially because the discussion on some key aspects of the proposal is still open,” the presidency said.

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