France to Weigh EU Carbon Price Corridor in Global Pricing Push

  • French government said to seek global carbon price discussion
  • France said to eye strengthening EU carbon market in next step

France seeks to stimulate a push for global carbon pricing and may weigh a price corridor to strengthen the European Union’s emissions trading system should countries worldwide agree to act, according to a person with knowledge of the matter.

In the first step, France wants to stimulate a global discussion about putting a price on pollution, said the person, who asked not to be identified. France, which holds the presidency over United Nations climate talks until November, then wants the EU to consider all available tools to promote emissions pricing abroad and strengthen it in Europe.

One method of propping up the EU emissions market, the world’s biggest, could be through the introduction of a carbon price corridor, according to the person. The 11-year old EU ETS does not currently allow price floors or ceilings. Permits to emit heat-trapping carbon dioxide in the European cap-and-trade program slumped 77 percent in the past eight years as industrial output fell amid economic slowdown, aggravating oversupply.

Benchmark allowances for December traded at 5.01 euros a metric ton on Thursday, below the range of 25-30 euros targeted by EU lawmakers when the rules for the 2013-2020 trading period were established. They failed to get a boost from an agreement reached by almost 200 nations in Paris in December to work toward capping global temperature increases.

In France’s view, a potential price corridor could be constructed in a similar way to the supply control mechanism under the market stability reserve agreed last year, according to the person with knowledge of the matter. The reserve, due to start in 2019, will automatically absorb allowances if a surplus of permits in the market exceeds a fixed limit, and release them to the market in the event of a shortage.

French considerations are at an early stage and the strategic issue needs to be further discussed by governments and companies, the person said. The country’s Environment Ministry was not immediately available to comment.

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