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Revised EU carbon market fix passes first hurdle

By John Parnell

Revised plans to boost the EU carbon market have been approved by the bloc’s environment committee.

Supporters will now try for the second time to win approval of the European Parliament.

The previous proposal to withhold 940m credits from the scheme to reduce the supply and boost flagging carbon prices was narrowly rejected by 334-319.

Intensive campaigning by the BusinessEurope lobby group and around a dozen MEPs who admitted to “pressing the wrong button” clouded the result.

Amendments, including a condition that the intervention will be a one-time event and a reduction in the number of withheld credits to 900m, were approved by the Environment Committee allowing the new proposal to be included on the agenda of the European Parliament’s sitting in early July.

Wednesday’s vote means the European Parliament will now rule on the issue in July (Source: Flikcr/EuroParliament)

Prior to the vote European Climate Action Commissioner Connie Hedegaard admitted the EU Emissions Trading System (ETS) was in trouble but warned the alternative to it was far worse.

“It’s not dead but it needs some life support,” she told the BBC on Monday. “That is what the MEPs have once again, a vote is coming up in two days and I can only encourage everyone to understand that all kinds of alternatives where you put a price on carbon are worse.

“The alternative is a frag patchwork of 27 different ways of doing things. I hope the parliamentarians will get their act together, particularly some of the British conservatives,” she added.

Friction

The largest party at the European Parliament, the European People’s Party (EPP), a centre right grouping, voted against the proposal last time they were in front of the plenary in April.

There are now signs that the EPP position is softening, which could be enough to ensure the smooth passing of the compromise deal.

“I think there is still a large opposition that just wants to kill climate policies. From my perspective they will always be pushing the wrong button,” Bas Eickhout, a Dutch Green Party MEP told RTCC earlier this month.

“The more serious part of the EPP has seen that this vote was causing a great outcry and they are realising they must build bridges, including internally. There is a group within the party that is in favour and a group heavily against, they were winning previously. Now those in the middle are taking their responsibility and looking for compromises,” he added.

Signs of the EPP split were evident ahead of today’s committee vote.

Eija-Riitta Korhola, the EPP point of contact for the issue stressed that the party’s position in the committee should “not tie the hands” of the party’s MEPs in wider parliament once it is their turn to vote next month.

Austrian MEP Richard Seeber then intervened to stress that the EPP’s position would be decided next week and that Korhola did not speak for the party.

Support for the new proposals is now expected to be sufficient to carry it through the vote in July.

“When we compare today’s results to the ENVI vote on 19 February, we see a much stronger chance of an increased number of Parliamentarians supporting backloading in Plenary in July” said Hæge Fjellheim, senior analyst at Thomson Reuters Point Carbon. “Despite the Green Party’s initial reluctance to the amended version of backloading, we expect they’ll support the plenary.”

More change

There is a growing consensus that the backloading proposal by itself will not be sufficient to save the ETS in the long term.

A paper by the UK based think tank Policy Exchange has called for larger structural reforms to the ETS to ensure it can continue to drive down emissions in the EU.

Critics say the ceiling on emissions, which determines how many are distributed among the companies participating in the scheme has been placed too high. If the EU decides to increase its greenhouse gas reduction targets, this could lower the cap and help increase the cost of emitting.

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