* UK wants to cancel number of permits to boost green
* Still considering proposal to deploy permit reserve
* Most EU nations back reform, unsure on timing
(Adds details following a meeting of EU environment ministers)
LONDON, July 16 Britain wants deeper reforms to
the EU Emissions Trading System (ETS) than those proposed by the
European Commission and Germany, favouring cancelling hundreds
of millions of carbon permits over launching a tool to regulate
In a report detailing its vision for the 2021-2030 ETS
phase, Britain said major changes are needed to help businesses
cut emissions, to protect them from foreign competitors, and
foster investment in low-carbon technology.
"The UK is asking for bold and comprehensive reforms to
restore the ability of the EU ETS to drive cost-effective
emission reduction and low-carbon investment," Ed Davey,
secretary of state for energy and climate change, said in a
statement on Wednesday.
The Commission, the EU executive, has proposed launching a
so-called market stability reserve (MSR) from 2021 to regulate
the supply of allowances in the ETS, the bloc's main weapon to
combat climate change.
As the only legislative proposal so far among wider
recommendations to extend energy and climate goals to 2030, the
MSR aims to expedite the shrinking of a surplus of more than two
billion permits, which has knocked EU carbon prices to around 6
euros per tonne from more than 30 euros in 2008.
Britain has not formally backed the MSR but has pointed out
that the sooner reform takes place, the sooner the ETS can be
restored as an effective policy.
"The MSR can potentially help but it is not the
comprehensive change we urgently need to tackle the surplus,"
said a spokeswoman for Britain's Department of Energy and
Climate Change, adding that the government is studying the
Instead, Britain said it wants to cancel permanently a
"significant number" of the surplus permits, without specifying
a figure or range.
The spokeswoman said the government is also weighing a
separate proposal from Germany to start the MSR in 2017, some
four years earlier than proposed by the European Commission.
Germany wants the 900 million allowances delayed from sale
under the EU's so-called backloading initiative to be put
directly into the reserve, rather than gradually reintroducing
them to the market as proposed by the Commission.
FOR AND AGAINST
Britain's announcement was published following an informal
meeting on Wednesday of all 28 EU environment ministers in
While a majority of EU member states and the European
Parliament must agree on any reforms for them to become law, the
talks are still at an early stage.
"It seems there is very solid backing for the establishment
of the market stability reserve; that was rather a clear message
given," Connie Hedegaard, Europe's climate commissioner, said by
phone after the meeting.
"At issue seems to be whether it starts in 2021 or at an
earlier date, though some member states did not come out on
their preference. We need to know more from them," she added,
declining to give details about specific countries.
The MSR proposal is likely to face resistance from
coal-dependent eastern states fearing higher energy costs than
those with a higher share of low-carbon energy production.
The Commission is keen for lawmakers to treat the reform
separately from potentially lengthier talks on the 2030 targets
to ensure it can be passed into law early next year.
But some EU nations believe the issues are closely connected
and best tackled together, according to two officials present at
the meeting who asked not to be named for policy reasons.
(Reporting by Michael Szabo and Ben Garside; Editing by Dale
Hudson and James Dalgleish)