BRUSSELS/LONDON Feb 22 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
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
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
More than 30 amendments to one clause go into text
supporting a one-off intervention to delay the sale of 900
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