Parliament approves measures to support carbon permit prices
Plans to freeze the auctioning of a portion of the current glut of CO2 permits to boost their price and encourage firms to invest in low-carbon innovation got the EP's seal of approval.
The measures, amended by the EP in July to set stricter conditions for the freeze, are intended to restore the incentive effect of the Emissions Trading System, which is designed to curb CO2 emissions.
“I am pleased that we managed to convince our colleagues that backloading is absolutely necessary for our emissions trading scheme to meet its objectives,” said Matthias Groote (S&D, DE), who is steering the legislation through Parliament, after his report was adopted by 385 votes to 284, with 24 abstentions.
"Finally! Sometimes it takes time to get things moving in politics - but we got it. Backloading is now a reality. With a solid majority," said Connie Hedegaard, European Commissioner for Climate Action.
“The ETS is not here to harm our industry, on the contrary. It rewards innovation and efficiency by putting a price on carbon. But it needs to deliver a clear price signal. Exchanges at the climate conference in Warsaw last month highlighted that carbon market schemes are now at a turning point. It is therefore paramount that we let the EU ETS reach its maturity,” he added.
Under Parliament's amendment, already agreed with member states, the European Commission may, in exceptional circumstances, adapt the timing of auctions, provided an impact assessment shows that the sectors concerned will not face a significant risk of companies relocating outside the EU. The Commission will only be able to make one such adjustment, up until 2020, covering a maximum of 900 million allowances.
The growing surplus of emission allowances – due to oversupply and the economic slowdown – has seen the carbon price fall well below levels estimated when the ETS was created. The European Commission therefore proposed measures to enable it to “backload” – or delay - the timing of a portion of the credits to be auctioned.
The Council of Ministers is to vote on the legislation at its meeting on 16 and 17 December. The measures to correct the carbon market can then be implemented by the Commission under powers delegated to it.
Market stakeholders such as IETA have welcomed the outcome, which constitutes a political endorsement to allow the European Commission to change the auctioning schedules during Phase 3 of the EU Emissions Trading Scheme (ETS) for up to 900 million allowances.