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10th Dec 2022

EP committee strikes down own report on carbon fix

  • In a surprise move, the industry commitee rejected its own report on a market mechanism for the carbon market (Photo: DerGuy82)

The European Parliament's industry committee on Thursday (22 January) rejected the early introduction of a market intervention system designed to the get the EU's carbon trading scheme back on its feet.

The “historic” voting result, in the words of the committee's chairman Jerzey Buzek, means that the industry committee will not provide the parliament's environment committee with an opinion.

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The environment committee is the so-called lead committee in the dossier.

The vote concerned the EU emissions trading system - in place since 2005 - which puts a price on greenhouse gases.

A glut of emission allowances in recent years saw the carbon price drop to such a low point that EU politicians agreed to intervene.

The European Commission in January 2014 proposed a market stability reserve (MSR), which would temporarily take out allowances if the amount of available pollution permits reached a certain level.

The commission suggested the MSR begin in 2021 - but the date has caused disagreement.

Germany and the UK want a 2017 starting date, something also supported by many left-wing MEPs.

Deputies suggested amending the original proposal to change the year from 2021 to 2017, but this was narrowly voted down (32 against, 30 in favour) on Thursday in the industry committee.

The committee then voted down the entire report, with 28 in favour of adopting it, 31 against, and 7 abstentions.

The committee's rapporteur, Italian centre-right MEP Antonio Tajani, “now has no mandate” to send his report to the environment committee, British centre-left MEP Theresa Griffin said.

This was a “very significant result”, said Buzek, since it means that the environment committee, which is set to vote on the issue in February, will now be the only committee to shape the parliament's version of the plan.

Backloading

Meanwhile member states as a whole appear unlikely to back an earlier date.

“There appears to be a qualified minority against running the market stability reserve from an earlier date, like 2017”, said a member state official.

The other issue on which governments have to agree is whether a tranche of 900 million allowances, which has been temporarily set aside in a move called backloading, should go immediately into the reserve, or be put on the market first.

According to the member state official there is "a large majority among the member states" in favour of putting the 900 million backloaded allowances in the reserve. “Backloading is a done deal”, the official said.

Nevertheless, some member states remain sceptical on the success of an MSR, arguing a market should be left alone as much as possible.

“We were not in favour of backloading when it was decided”, noted a Polish diplomat.

MEPs have yet to agree on backloading.

Member states and parliament have to thrash out a compromise together but, despite the divisions, some are confident a solution will be found.

“The market stability reserve is a relatively simple proposal. I estimate it will be accepted before the summer break”, the member state official said.

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