* Commissioner cannot be more specific on time frame
* Carbon market dips, then rallies
(Adds comment, background)
By Barbara Lewis
HORSENS, Denmark, April 19 The European
Commission will review its auctioning rules for the EU's carbon
Emissions Trading System (ETS) by the end of the year as part of
efforts to boost the market, the EU's climate commissioner said
A review could help to tackle the glut that has pushed
carbon prices down to record lows because it could alter the
time scale of when allowances become available.
"We are moving forward with this first annual report, in
which we will address a number of issues, including this
auctioning profile," EU Climate Commissioner Connie Hedegaard
"Then we will not be flooding the market with as many
She said she could not be too specific about the timing, but
the review was being brought forward from next year.
"It will also be a golden opportunity to look into the
auctioning profile for the 2013-2020 auctioning period," she
Any Commission proposal for reform would have to be approved
by EU member states.
"We're one step closer to urgently needed intervention in
the ETS," Sanjeev Kumar, senior associate at non-governmental
organisation E3G, said.
The current phase of the ETS market runs until the end of
this year and then a new regime comes into effect in which more
allowances will be auctioned and less handed out for free.
The Commission has come under pressure from some sectors of
business and from the European Parliament, which earlier this
year called on the EU's executive to draw up a plan for removing
a certain number of allowances from the market.
Hedegaard said the possibility of setting aside allowances
was under consideration, but the Commission had been looking for
something it could do "more or less right away".
Analysts said the effect of reviewing the auction time scale
could be the same.
Hedegaard was speaking on the sidelines of informal meetings
of EU energy and environment ministers in Horsens, Denmark,
which held a lunchtime debate on the ETS.
"There was strong and unanimous support from both ministers
and industry on the ETS," Martin Lidegaard, energy minister for
Denmark, holder of the current EU presidency, told reporters.
Poland, however, which is heavily dependent on
carbon-intensive coal, has repeatedly made clear its opposition
to anything that would drive-up the price of carbon allowances.
Carbon analysts said the carbon market, which fell to just
under 6 euros early this month, should draw support from the
"It's a clearly bullish sign because this one of the most
promising statements (about tackling the supply problem) we've
seen from the European Commission so far," Ingo Tschach,
managing director of Tschach Solutions, said.
The market dipped immediately after Hedegaard's statement
and then recovered to trade nearly 1 percent higher on the day
at around 7.4 euros.
Prices have collapsed under the pressure of surplus
allowances caused by economic recession and are far too low to
spur low carbon investment.
"It's not going to solve all the market's problems but at
least it could happen this year and would be an important first
step," Peter Liese, a German Christian Democrat Member of the
European Parliament, who has been among those arguing for
(Additional reporting by Ben Garside and Jeffrey Coelho in
London,; Editing by Rex Merrifield and Alison Birrane)