Friday

22nd Jun 2018

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.

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There are no firm proposals in Wednesday’s plans on how many allowances should be withdrawn from sale, but the commission’s own analysis mentions 400 million, 900 million or 1.2 billion of them.

MEPs have called for 1.4bn allowances to be withdrawn permanently – a number supported by industry, including giants Shell and GDF Suez.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

Greece and creditors proclaim 'end of crisis'

After late-night talks, the Eurogroup agreed on a €15bn disbursement and debt relief measures for Greece, while setting out a tight monitoring when the bailout ends in August.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

News in Brief

  1. Venice Commission: Hungary should repeal NGO law
  2. Trump threatens to slap 20 percent tariff on EU cars
  3. EU closes deficit procedure against France
  4. Romania's ruling party leader gets jail sentence
  5. EU states defer individual decisions on asylum reforms
  6. Commission opens case on Qatar gas flow
  7. EU adopts posted workers directive
  8. EU leaders to call for 'coordinated plan' on AI

Stakeholders' Highlights

  1. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  2. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  3. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  4. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  5. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  6. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  7. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  8. Mission of China to the EUChina: Work Together for a Better Globalisation
  9. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  10. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  11. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  12. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network

Latest News

  1. Migration row at centre of EU summit This Week
  2. Merkel's woes cast shadow on EU's future
  3. Europe's tech race - trying to keep pace with US and China
  4. Merkel and Juncker's mini-summit risks fiasco
  5. Greece and creditors proclaim 'end of crisis'
  6. How a US firm pushed for EU €2.1trn pension fund
  7. Commission defends Africa migrant plan ahead of summit
  8. Bavaria hijacks EU migration talks

Join EUobserver

Support quality EU news

Join us