BRUSSELS, Feb. 22 (UPI) -- The beleaguered EU carbon emissions trading system survived a key vote in the European Parliament this week, in which MEPs agreed to "backloading."
The Parliament's Committee on Environment, Public Health and Food Safety, ENVI, voted by a substantial margin Tuesday to endorse the European Commission's call to backload, or withhold, 900 million tons of carbon allowances that were set to be auctioned for the 2013-15 period.
The total -- amounting to about one-quarter of the planned auction -- would be backloaded into the 2019-20 period in a bid to prop up record-low prices, which had plunged to less than $4 per ton of carbon equivalent.
Analysts said a negative vote from ENVI could have spelled doom for the trading scheme, which has languished as the financial crisis and resulting slump in European industrial activity has dampened demand for the allowances.
Despite vociferous opposition from business groups who say artificially propping up the carbon prices will hurt Europe's global competitiveness, ENVI reversed a thumbs-down given to backloading by Parliament's industry committee in January, which triggered a record fall in carbon prices to just $3.73 per ton.
"The environment committee has sent a clear signal in favor of a strong and healthy emissions trading system," ENVI Chairman Matthias Groote said. "A stronger carbon price will help catalyze Europe's transition towards a low-carbon economy."
The measure now goes to a "trialogue" between Parliament, the European Commission and the council of EU member states before returning to the legislative body for a plenary vote, scheduled for April.
Under the EU ETS, heavy industries, energy companies and other air polluters can purchase allowances to emit greenhouse gases above their allowable quotas, which, if expensive enough, can persuade them to make the changes necessary to cut emissions levels.
The free-market ETS system has been shown to work when demand for the allowances are high but the economic slump has resulted in surplus allowances, sending their prices tumbling well below the $30-$50 per ton level needed to persuade industrial buyers to reduce greenhouse gas emissions.
Calling the vote a "lifeline" for the trading system, the environmental groups WWF, Greenpeace and Climate Action Network Europe declared in a joint statement the move saved an important, if hobbled, tool to help Europe reach its greenhouse gas-reduction targets.
"Today the ailing EU carbon market was given emergency treatment, but full recovery will require proper surgery," WWF EU climate policy officer Sam Van den Plas said. "Backloading of emission allowances is only a temporary first step. Structural reforms of the carbon market need to make a reality of the EU's 30 percent domestic carbon emission reduction commitments."
"Despite the vote, there's little reason to celebrate today," added Joris den Blanken, EU climate policy director for Greenpeace. "The backloading proposal might slow the slide in the carbon price, but permanent cancellation of allowances and strong 2030 targets are essential if it is to achieve its aims."
The backloading proposal was opposed by the center-right European People's Party.
"Interfering in a market system with the intention of creating price incentives while increasing costs for industry and small and medium-sized enterprises would send the wrong signal in times of economic slowdown," Slovenian MEP Romana Jordan said.
|Additional Energy Resources Stories|
BRUSSELS, May 22 (UPI) --The European Union will carefully weigh the risks of shale gas development this year but also needs to stem high energy prices, the EU's energy chief says.
SANTIAGO, Chile, May 21 (UPI) --More than $4 billion of cash reserved for Chilean military procurement remains unspent because of mysterious workings of funding arrangements.