UPDATE 1-Irish EU presidency aims to seal carbon market deal

Tue Jan 8, 2013 12:54pm EST

Related Topics

* Risk carbon market would exist in name-only without action

* EU Emissions Trading Scheme hit record low in December

* Parliamentary chair says could ask for quicker plenary vote

By Barbara Lewis

BRUSSELS, Jan 8 (Reuters) - Ireland, holder of the EU presidency for the next six months, is working with opponents of a proposal to boost the European Union's carbon market in hopes of brokering a compromise, Environment Minister Phil Hogan said on Tuesday.

"It's the intention to get it through," Hogan told Reuters on the sidelines of a Brussels conference, when asked if a deal was possible before the end of the Irish EU presidency in June.

Without agreement on providing support for the carbon market, which hit a record low of 5.61 euros in December , Hogan said the EU Emissions Trading Scheme (ETS) "would survive in theoretical terms, but it would exist in name only."

The European union's ETS was set up with the aim of lowering emissions by charging manufacturers and utilities for their emissions but the price of carbon has become too low to induce sweeping changes.

A major problem has been a surplus of carbon permits, prompting the European Commission to put forward a proposal last year calling for the temporary withdrawal from the market of 900 million carbon allowances in a process known as backloading.

The Commission had hoped a fast-track EU process could achieve a political agreement by the end of last year.

But opposition from Poland, heavily reliant on carbon-intensive coal, and the unwillingness so far of Germany, the EU's most influential member, to take a stance has slowed the process.

Germany's indecision has been blamed on the inability of its economy and environment ministries to agree a common position.

COMPROMISE?

Hogan said revealing detail could jeopardise negotiations, but a compromise was possible.

"I've been talking to both countries (Poland and Germany). I think we will be able to make some progress, but I don't want to go into detail. We may be able to keep everybody on board," he said.

"I think there has to be a pragmatic way in which everybody can agree an interest in putting a floor on the price of carbon, so the ETS will be able to survive."

Even if member states endorse the plan, it will require a further administrative process involving parliament and member states of 4-5 months before formally becoming law, analysts at Thomson Reuters Point Carbon said.

Matthias Groote, chairman of the European Parliament's environment committee, who is steering debate on the proposal, reiterated the committee would hold its vote on a legislative amendment, which is part of the backloading reform, on Feb. 19.

If member states can reach agreement, he told Reuters he would then ask for permission to shorten the period between the committee vote and the plenary parliamentary vote.

Climate Commissioner Connie Hedegaard has not disguised her impatience over the repeated delays.

"We still have a number of member states, even some who normally have a green profile, who have not been able to step forward with a position. We need them to come forward very soon," she said on Tuesday.

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