A European Commission proposal to delay auctioning of emissions allowances in the European Union’s emissions trading scheme (ETS) so as to increase the deflated price of carbon passed a crucial vote in the European Parliament on Tuesday (19 February).
The proposal to delay the auctioning of allowances scheduled for 2013-15 until 2018-20, called ‘backloading’, was approved by members of the Parliament’s environment committee (ENVI) by 38 votes to 25, with two abstentions.
The committee’s backing was thrown into some doubt last month after the Parliament’s industry committee voted to reject the proposal. The environment committee is the lead committee on the issue.
The centre-right European People’s Party group has taken a stance against the proposal, but eight of its members on the environment committee broke ranks to vote for backloading.
Ahead of the vote, Point Carbon, an organisation that analyses the carbon market, had even predicted that if the ENVI committee voted against the proposal, it might cause a collapse of the ETS.
Market analyst Marcus Ferdinand said a negative vote would cause carbon prices, already at a historic low, to drop by a further €2 per tonne to €3 per tonne. “It would make the EU ETS irrelevant as a climate policy measure at least until 2020,” he said.
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A vote by the full Parliament will be held in the coming months. The Parliament has not yet decided whether to wait for the plenary vote before beginning negotiations with the EU’s member states, which are to debate the issue next week. Several countries, notably Poland, are strongly against the proposal. Significant players, including Germany and the United Kingdom, have yet to decide their stance.
Environmental campaign groups welcomed the outcome of the vote in the environment committee, but warned that stronger action was still needed to save the ETS, which analysts warn is in danger of collapse.
“MEPs are working with the options on the table, but there is no getting around the fact that no amount of fiddling with the ETS will make the system fit for the challenge of tackling the climate crisis,” said Brooke Riley of Friends of the Earth.
Energy-intensive industries warned that backloading would erode confidence in the ETS. “Artificially increasing the carbon price by withholding or removing allowances will undermine the competitiveness of European industries by increasing energy bills even further,” said Gordon Moffat, director-general of Eurofer, the trade association for European steel.
But Eurogas, which represents the natural gas industry, welcomed the vote. “Eurogas would now like to see a speedy agreement between the European Parliament and the Council to increase market confidence in the ETS,” said Beate Raabe, the group’s secretary-general.