German economy ministry still opposed to carbon permit set-aside

Mon Dec 10, 2012 6:30am EST

Related Topics

* No change in German economy ministry position -spokeswoman

* EU member states to vote on set-aside plan next year

BERLIN Dec 10 (Reuters) - Germany's economy ministry remains opposed to a European Commission plan to remove carbon permits from the EU's Emissions Trading System (ETS), a ministry spokeswoman said on Monday, after reports suggested a compromise was close to being reached.

Germany's environment and economy ministries have clashed over the issue of temporarily withdrawing or setting aside carbon permits from the ETS to help boost low prices in a process known as backloading.

The environment ministry supports the idea, but the economy ministry has said the move is unnecessary because the ETS has helped lower Europe's carbon emissions.

Germany has refused to take a formal position on the issue until the clash between the two ministries is resolved.

However, a media report on Friday suggested that the ministries could be near to an agreement, which sent carbon prices up by more than 5 percent.

A spokeswoman for the economy ministry said that there was no change in position on the proposal.

"Economy Minister Rosler has made it clear that, for him, a cut in emissions rights is out of the question," she said.

Last month, the European Commission decided it would not ask EU member state officials to vote on the backloading proposal at a Dec. 13 meeting.

The move to delay the vote until next year is widely viewed as stemming from concerns that Germany, the EU's top economy and a key vote in the ballot, might abstain due to the ministerial disagreement.

Prices for carbon permits under the ETS have fallen to record lows under 6 euros as demand for permits has been crushed by Europe's economic slowdown and permit auctions keep injecting supply into the market.

To help boost prices, the European Commission has proposed removing a portion of permits from the market for several years.

Some 900 million carbon permits would be removed between 2013 and 2015 and then reintroduced to the market in 2019 and 2020.

The plan will be voted on by EU member states next year, and faces opposition from Poland which does not want higher carbon prices as these hurt its coal industry. Italy has called for the ETS to be replaced by a carbon tax.

Traders are eager for the Commission plan to be signed off on by member states, so prices can regain some ground.

Prices for the benchmark EU carbon permit contract were down 1.77 percent at 6.66 euros a tonne on Monday. (Reporting by Markus Wacket in Berlin; Writing by Nina Chestney; editing by Jason Neely)

FILED UNDER: