CORRECTED-Commission seeks to speed up EU carbon market remedy

Fri Oct 5, 2012 11:03am EDT

(Corrects first name of director-general in paragraph 4)

* Commission seeks more rapid timetable in Euro Parliament

* EU will only modify airline law if UN body has global plan

* Electricity industry backs backloading, others opposed

By Barbara Lewis

BRUSSELS, Oct 5 (Reuters) - Talks are under way to hasten a deal to prop up the European Union's ailing carbon trading scheme, a senior European Commission official said on Friday.

Traders of allowances on the EU Emissions Trading Scheme (ETS) have been waiting for months for details and decisions on Commission plans to hold back some of the massive surplus of carbon allowances that has depressed the market.

To reinforce the plan's legality, the Commission has also announced a legislative amendment, on which the parliamentary environment committee is scheduled to vote on Feb. 19 next year, far later than advocates of taking action foresaw.

"We are not entirely thrilled with the timetable the European Parliament has proposed," Jos Delbeke, director general of the Commission's climate department, told a conference in Brussels on Friday.

"We are continuing to discuss with the European Parliament and we hope to bring the timetable forward."

He said he could not be more specific, while parliamentary officials said a vote by the year-end was technically possible.

Delbeke insisted the "Emissions Trading Scheme is here to stay" and the Commission was not flinching in the face of international opposition to the inclusion in the ETS of all airlines flying in and out of Europe.

Requiring all flights to pay for emissions via the ETS has triggered threats of a trade war and draft blocking law in the U.S. Congress, which would shelter U.S. airlines that breached the EU legislation.

To try to resolve the row, all sides are looking to U.N. body the International Civil Aviation Organization (ICAO) to agree an alternative global way to tackle airline emissions.

Asked whether the EU had a plan in the event ICAO - as many suspect - cannot deliver a compromise, Delbeke said: "The contingency plan is that the ETS is in place."

"We say we are open to modifying our system in the light of an agreement in ICAO. If there is no agreement, our system continues," he told reporters on Friday.

ETS PHASE THREE LOOMS

The aim of the Commission is to get agreement on withholding allowances in time for action at the start of the next phase of the ETS (2013-2020), when many more permits will be auctioned rather than handed out for free and new sectors join it.

The market was on Friday trading close to eight euros a tonne, far below levels needed to spur investment in green energy, rather than polluting fossil fuel.

Adding to the voices in favour of a quick deal on temporary withdrawal of carbon allowances, referred to as backloading, industry body Eurelectric on Friday said it supported the plan, as a signal that wider reforms would follow.

"We support a phase three backload in order to signal the EU's long-term commitment to a strong ETS," Hans ten Berge, secretary general of Eurelectric, which represents the electricity industry in 32 nations, said.

Other sections of business and industry oppose the Commission's backloading plans, either because they are against intervention altogether or because they say only long-term measures are valid.

"Short-term measures such as changes to the ETS auctioning regulation to backload allowances must be avoided as these would interfere with a more constructive discussion on how to achieve a systemic solution," Philippe de Buck, director general of Business Europe, said in a letter to the European Parliament.

In addition to backloading, the Commission has said it will publish options for more lasting reform, such as permanently removing allowances. Details are expected, together with a carbon market report in November. (Editing by James Jukwey)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.