EU politicians poised to back carbon, energy action

Tue Feb 28, 2012 3:40am EST

Related Topics

* Energy saving a priority for Danish EU presidency

* Carbon market intervention would need Commission proposal

* Broad support for compromise proposals

By Barbara Lewis

BRUSSELS, Feb 28 (Reuters) - European Union politicians are expected on Tuesday to back action to prop up the collapsed carbon market, as part of a wider debate on energy saving, putting pressure on the EU executive to tackle a huge surplus of pollution permits.

Anticipation of a positive vote in the European Parliament has helped to drive up EU carbon allowances from a low of less than 7 euros in December to above 9 euros.

Supporters of market intervention span the political divide and include industry as well as the environmental lobby. They argue decisive parliamentary backing would make it hard for the European Commission, the 27-member bloc's executive, not to act.

In December an environment committee vote called for the withdrawal of 1.4 billion carbon permits from the market beginning in 2013.

But the specific number was passed by only one vote.

In an effort to win cross-party consensus, Tuesday's industry committee will instead vote on a compromise amendment asking the Commission to consider measures that could include withholding "the necessary amount" of allowances.

"There is a very broad consensus with all the political groups," Claude Turmes, vice president of the Greens, who is steering the energy efficiency draft through parliament, told reporters, referring to the package of compromise amendments.

"It will be supported by a broad majority," German Christian Democrat parliamentarian Peter Liese told Reuters.

But, he added, Polish members of the European Parliament's main centre-right grouping were against any form of set-aside.

Heavily reliant on coal, Poland is concerned about the impact of stronger carbon prices on its economy.

The carbon amendment has been thrown into the efficiency debate because of an assumption any improvement in the EU's record on energy saving would drive down carbon prices further.

Recession has already led to a huge surplus of allowances and pushed prices far below the level needed to encourage a shift towards a low carbon economy.

DANISH PRIORITY

The Energy Efficiency Directive itself is a legislative priority for Denmark's EU presidency, which has said it aims to get a political deal on it before its leadership finishes at the end of June.

Members of the Parliament have devoted months of debate to reducing around 2,000 amendments to 18 proposals.

Turmes said the compromises combined flexibility with greater ambition than the Commission's proposal.

But even if they now have broad parliamentary backing, EU ministerial debate, which will follow, could be difficult.

"This directive is a key directive for the EU economy to restart," Turmes said, referring to its power to create jobs and reduce dependency on expensive foreign imports of oil and gas.

But it is still very divisive.

"Everybody says 'yes', they're in favour when you ask them about efficiency, but as soon as you go down to decide measures, a lot of actors and very powerful actors do not really want to see efficiency become real," Turmes said.

Efficiency was one of a set of three 2020 targets set in March 2007 to cut carbon emissions by 20 percent, increase the share of renewables in the energy mix by 20 percent and reduce energy use by 20 percent through measures such as insulation.

The efficiency goal is the only non-binding target of the three and it is the one the EU will not meet unless the draft law is passed in a form strong enough to change behaviour.

The draft law proposed by the Commission would require energy firms to achieve annual energy savings equal to 1.5 percent of their sales, and the renovation of 3 percent of the floor area of public buildings.

The 3 percent has been whittled down to 2.5 percent by the compromise amendments under discussion in parliament, but other requirements are introduced, including "deep renovation", which amounts to 75 percent of energy reduction in a building. (Editing by Charlie Dunmore and Jason Neely)

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