EU Parliament committee passes revised emissions trading scheme fix

BRUSSELS, June 21 (UPI) -- A European Parliament committee this week threw a lifeline to the beleaguered EU emissions trading system, passing a revised measure to "backload" allowances.

The EP's Environment Committee Wednesday overwhelmingly approved a bill that makes changes in to a proposed fix for ETS that was rejected by the 754-member plenary body in April.


The revised proposal contains compromises meant to make the plan to manipulate the struggling open market for the allowances more acceptable to EP members who sided with business in opposing the move.

They have cited fears that artificially raising prices for allowances -- through which businesses essentially buy the right to release greenhouse gas emissions -- will prohibitively boost the cost of doing business in the EU.

"We now have broader support for a solution that will allow the ETS to fulfill its purpose and support innovation to tackle climate change," EP rapporteur Matthias Groote of the Socialists & Democrats group said. "I believe the full Parliament will endorse our proposals and let us start negotiations with EU ministers as soon as possible."

The European Commission had been pushing to boost faltering prices for carbon allowances by reducing an oversupply caused by the economic downturn -- "backloading" them from the current 2013-15 period to 2018-20.


But the full Parliament in April narrowly rejected the proposal, sending prices for allowances plunging to an all-time low of $2.20 per ton of carbon equivalent and sparking predictions the ETS had been dealt a possibly fatal blow.

EP members opposing backloading said propping up prices by manipulating the availability of allowances was the wrong way to bring about reforms and would only undermine confidence in the scheme.

Some also predicted higher carbon prices would hurt the competitiveness of European industry and would only be passed along to consumers in higher household energy bills.

Changes in the current proposal include assurances the backloading would only be a one-time-only affair and that allowances would be put back on the market "starting from the year following that during which allowances have last been withheld," rather than waiting until 2018-20.

It also calls for 600 million of the 900 million backloaded allowances to be made available to establish a fund supporting "innovative low-carbon technologies, demonstration projects" and measures to reduce the costs and carbon emissions of energy-intensive industries.

"As I have always said, backloading is a quick, temporary fix," Groote said. "Structural reform of our emissions trading system will follow to ensure it remains the cornerstone of EU's climate policy and an inspiration to others around the world."


The measure will again face a full parliamentary vote next month and then must be adopted by the environmental ministers of EU member states.

The main EU business lobby, BusinessEurope remained opposed to the backloading idea.

"BusinessEurope still considers the backloading proposal of the European Commission to be an unnecessary political intervention into the ETS market since European industry is on target to meet Europe's 2020 CO2 reduction target," Markus Beyrer, the group's director general, said in a statement.

The food security group Oxfam, meanwhile, welcomed the vote of confidence in the ETS.

"Today's vote sent a signal to markets that EU climate policy is here to stay, though the compromise adopted will weaken the Commission's original proposal substantially," Lies Craeynest, Oxfam's EU climate change expert, said in a statement.

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