Carbon plan can pass with German backing: EU climate chief

ABU DHABI Wed Jan 16, 2013 12:43pm EST

EU commissioner for Climate Action Connie Hedegaard speaks during the United Nations Climate Change (COP18) Conference in Doha December 3, 2012. REUTERS/Fadi Al-Assaad

EU commissioner for Climate Action Connie Hedegaard speaks during the United Nations Climate Change (COP18) Conference in Doha December 3, 2012.

Credit: Reuters/Fadi Al-Assaad

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ABU DHABI (Reuters) - An EU executive plan to reduce a glut of carbon emissions allowances, which are trading close to record lows, can pass provided it gets German support, EU Climate Commissioner Connie Hedegaard said on Wednesday.

The European Commission proposal, known as backloading, would remove permits from the first three years of the new phase of the carbon market (2013-2015) and put them back on the market at the end of it (2019-2020).

Coal-dependent Poland is strongly opposed to anything that could drive up the cost of allowances on the European Union's Emissions Trading Scheme (ETS), where a surplus generated mostly by economic recession has pushed the price to less than six euros, compared with around 30 euros ($40) in 2008.

But the backloading plan, which many say is urgently needed to restore faith in the ETS, can still pass if Germany backs it.

"Yes, if the Germans back it. And then I hope the UK would also come out in favor of that because obviously they have said they want to be even more ambitious, but in politics sometimes you have to take what you can get when you can get it," Hedegaard said in an interview with Reuters.

"If that changes after the elections in Germany, yes then I think we will get them," she said at the World Future Energy Summit in Abu Dhabi.

Germany, the European Union's most influential member, has yet to take a stance.

The environment minister has spoken in favor of the plan, while the economy minister, reflecting the powerful heavy industry lobby opposed to any increase in energy costs, has so far opposed it.

German elections in Lower Saxony on Sunday could lead to a change of economy minister and unlock the indecision.

ABSTENTION RISK

Some observers, however, have speculated Germany will slide into an abstention as it focuses on federal elections later in the year, at which Chancellor Angela Merkel will seek another term of office.

Hedegaard called for early decisions.

"I think it is urgent and I think that those member states that haven't internally made up their mind yet must realise that industry and investors need to know what they can count on," she said.

She declined to speculate on the fate of the backloading proposal should Germany refuse to back it.

Ireland, as current holder of the rotating EU presidency, has said it will try to broker a deal before the end of its six months at the helm of EU debate.

A presidency source on Wednesday summed up the mood of member states so far as "undecided, with a few exceptions".

The presidency and the Commission meanwhile are working with other trading schemes to develop links, notably with Australia, with which plans for a tie-up were announced last year.

"During the Irish presidency, we will be seeking a mandate that we can start the very formal negotiations," Hedegaard said of the talks with Australia.

"It is just one part of the bigger vision that in the end - not tomorrow, not next year, not in the very foreseeable future - but in the end, the aim should be to have a global price on carbon." ($1 = 0.7492 euros)

(Additional reporting by Barbara Lewis in Brussels; Editing by Keiron Henderson)

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