Wednesday

16th Jan 2019

Brussels moves to tackle slumped carbon market

  • The EU commission has itself been divided on the backloading proposal (Photo: EUobserver)

The European Commission on Wednesday (25 July) announced short-term plans to bolster the carbon Emissions Trading Scheme, its flagship environment project undermined by rock bottom carbon prices.

The scheme, which allows companies to buy and trade pollution allowances, has suffered from an over-allocation of allowances compounded by the economic downturn and drop in manufacturing output.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

In April carbon prices dropped to their lowest level - €5.99 - since trading started in 2005. They are currently trading at around €7.00 down from a high of €20 in 2008.

"The EU ETS has a growing surplus of allowances built up over the last few years,” Climate Commissioner Connie Hedegaard said. “It is not wise to deliberately continue to flood a market that is already oversupplied.”

She has proposed delaying the sales of new allowances – known as backloading - in the next phase of the scheme, starting in 2013.

There are no firm proposals in Wednesday’s plans on how many allowances should be withdrawn from sale, but the commission’s own analysis mentions 400 million, 900 million or 1.2 billion of them.

MEPs have called for 1.4bn allowances to be withdrawn permanently – a number supported by industry, including giants Shell and GDF Suez.

“This re-profiling of the auctioning calendar should, at a minimum, reflect the European Parliament Environment Committee’s position calling for the withdrawal of 1.4 billion ETS Allowances,” they said in a statement on Wednesday along with nine other companies.

But the lack of specific figures in the Wednesday’s proposal reflects internal wrangling in the commission. The industry directorate general has been pushing for an impact assessment to be carried out first. Industry organization BusinessEurope last month warned in a letter to the commission that changing the auctioning schedule could hurt companies, already under strain due to the economic crisis.

The disagreement has meant that the commission will now only publish suggest specific figures as well as long term structural changes to the ETS system after the summer recess.

This leaves a tight window to get the proposed change in allowances through parliament and member states before the new auctioning phase in 2013.

“Despite the urgent need to repair the misfiring emissions trading scheme, the Commission is tiptoeing towards action,” said Dutch Green MEP Bas Eickhout.

The commission says it can be done if there is "political will." "It is up to the European Parliament and Member States to deliver," said Hedegaard.

But the issue is controversial among member states too.

“When the rules of the next phase of the ETS were negotiated in 2008 it was agreed that it will be a market mechanism,” Polish environment minister Marcin Korolec told Bloomberg earlier this month.

“Let’s stick to this rule. Backloading would be aimed at eventually tightening the emissions target and that’s not a move Poland could back,” he added.

Poland to veto EU low carbon plan

Polish environment minister Marcin Korolec has said he will veto an EU proposal for CO2 cuts at a meeting in Brussels on Friday.

EU steps up security of emissions trading system

EU member states have backed tighter security measures for the EU's emissions trading system, after cyber-thieves hacked in earlier this year and stole roughly €30 million in carbon credits.

News in Brief

  1. British PM scrapes through no confidence vote
  2. Spanish PM calls for EU gender equality strategy
  3. Farage says bigger Brexit majority if second referendum
  4. Macron starts 'grand debate' tour after yellow vests protests
  5. Barnier: up to London to take Brexit forward
  6. Stimulus still needed, ECB's Draghi says in final report
  7. May's Brexit deal defeated by 230 votes
  8. German economy hit by global economic turbulence

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Latest News

  1. MEPs allow Draghi's membership of secretive bank group
  2. EU parliament backs Morocco deal despite row
  3. Barnier open to 'future relations' talks if UK red lines shift
  4. German spies to monitor far-right AfD party
  5. On Morocco, will the EU ignore its own court?
  6. UK parliament rejects May's Brexit deal in historic defeat
  7. EU suggests majority vote on digital tax by 2025
  8. MEPs redouble appeal on sexual harassment

Join EUobserver

Support quality EU news

Join us