TIMELINE-The EU's tangled carbon tale
BRUSSELS/LONDON Feb 22 (Reuters) - Here is a look at a European Commission proposal to help buoy carbon prices by temporarily removing some permits from the EU Emissions Trading Scheme (EU ETS).
June 22, 2011 - The Commission publishes its draft Energy Efficiency Directive, prompting a deep sell-off on the EU ETS from which it has never really recovered.
The theory was improved energy efficiency would lead to reduced demand for carbon allowances to offset the burning of fossil fuels for power generation.
As a result, the European Parliament raised the idea of intervening to remove some allowances in the context of the energy savings debate.
Dec 20, 2011 - The European Parliament's Environment Committee votes by a margin of one vote in favour of removing 1.4 billion permits and by a wider majority to take away a "significant number" of permits. EU carbon prices rise as much as 40 percent.
Feb. 28, 2012 - The industry committee passes a proposal to let the EU Commission take measures that "may include withholding the necessary amount of allowances". The combined industry and environment voices imply political will for action, analysts say. Prices rise to a 10-week high but then fall 6 percent within 10 minutes as traders quickly take profit.
April 19, 2012 - Climate Commissioner Connie Hedegaard announces she will bring forward an annual report on the carbon market to assess the need for reform and amend the carbon auctioning timetable to address a surplus of permits.
The strategy, known as backloading, involves taking away some permits in the near term and adding them back later and is seen as one that can be agreed quickly in theory. The market reacts cautiously, gaining 1.5 percent.
June 14, 2012 - EU reaches a deal on an Energy Efficiency Directive, while admitting it would not be enough to hit a 20 percent energy savings goal.
Denmark, then holder of the EU presidency, was wary of derailing the energy savings law by complicating it with the ETS debate, but tagged on to the legislation was a pledge the Commission would take action to support the market.
EU sources reveal the content of the Commission's draft backloading proposals, noting they could delay the sale of between 400 million and 1.2 billion allowances.
Carbon prices hit a six-week high the following day.
July 25, 2012 - Commission formally presents its plans to prop up the ETS - both the short-term measure of backloading and an outline of deeper reform, such as permanently removing permits or tightening a cap on how much carbon big emitters can produce.
It also says it will accompany this with a simple legal amendment to ensure the legality of backloading. The Commission stresses that agreement is feasible in principle by the end of 2012.
The market reacts bearishly to a lack of detail on the amount of permits to be withheld.
Nov. 14 - The Commission publishes options to reform the ETS in a report and warns that even moving to a more ambitious emissions cut target will still leave the market over-supplied with permits. Prices fall nearly 10 percent.
Nov. 29 - The Commission admits delay to its plans, with an announcement member states will not vote until 2013. The delay is linked to the failure of Germany to take a stance. Carbon prices hit a then-record low below 6 euros the following day.
Jan 24, 2013 - European Parliament's industry committee in a non-binding opinion rejects the idea of backloading, sending prices down 60 percent to an all-time low of 2.81 euros.
Feb 19 - Environment Committee supports backloading, but fails to make a decision on beginning talks on law drafting, which bring together the Commission, Parliament and member states.
More than 30 amendments to one clause go into text supporting a one-off intervention to delay the sale of 900 million permits.
The market initially rises on the support for backloading but then falls as much as 20 percent as indecision on legislative drafting is interpreted as another delay.
Feb. 27 - Committee of member states to give its view on backloading. Date to be set in April, possibly March, on a plenary debate in parliament. (Reporting by Barbara Lewis and Nina Chestney; editing by Jason Neely)
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