EU ministers urge July decision on carbon market: draft

BRUSSELS Mon May 6, 2013 6:09pm EDT

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BRUSSELS (Reuters) - Governments and members of the European Parliament must decide on a plan to prop up the EU carbon market by July at the latest, a joint statement from nine energy and environment ministers, said.

The statement, seen by Reuters, is expected to be published officially on Tuesday to coincide with discussions among members of the European Parliament on the European Commission plan.

No-one from Britain's Department of Energy and Climate Change, which is expected to release the statement, was immediately available for comment.

A proposal, known as backloading, to strengthen the Emissions Trading Scheme (ETS) by removing some of a glut of carbon allowances generated by recession was rejected by the European Parliament last month in an initial vote.

The rejection followed lobbying by energy intensive industry concerned about the positive impact on energy prices, while at member state level, coal-intensive Poland has sought to block the plan.

Dominant EU member state Germany has failed to agree a common position. The issue has become a political flashpoint ahead of elections later this year as the economy ministry opposes intervention and Germany's environment minister supports it.

Last week, Chancellor Angela Merkel also said backloading was necessary, but that it could not be agreed until after the German election in September.

Tuesday's statement said that was not soon enough.

It called on the EU member states and parliament to "take the urgent steps necessary" to come to "a swift resolution of the backloading proposal by July of this year at the latest".

Interference in markets had to be kept to a minimum, but "a one-off and targeted intervention now would minimize market uncertainty" and promote investment in low-carbon technology, it said.

Backloading was only ever meant to be an emergency fix for a market that has collapsed to a series of record lows, with carbon allowances still priced at less than four euros per metric ton.

The Commission has also opened debate on more sweeping reform of the market and the statement calls on the EU executive to deliver by the end of the year at the latest proposals on "a proper structural reform".

The nine signatories included British Secretary of State for Energy and Climate Change Ed Davey, as well as German Environment Minister Peter Altmaier and ministers from Denmark, Finland, France, the Netherlands, Portugal, Slovenia and Sweden.

(Reporting by Barbara Lewis, editing by William Hardy)

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