* Too early to decide how many allowances to withhold
* Next meeting in October
* Carbon market trades narrow range as uncertainty drags on
By Barbara Lewis and Nina Chestney
BRUSSELS/LONDON, Sept 18 EU technical experts on
Wednesday held a preliminary discussion on proposals to prop up
the EU Emissions Trading Scheme, with Poland standing out as the
sharpest opponent, while the majority of nations took no firm
position, EU sources said.
The closed-door meeting did not get as far as a serious
debate about how many allowances should be withheld from the
next stage of the Emissions Trading Scheme (ETS) beginning next
year, one source said on condition of anonymity.
Another said "there were constructive discussions, but no
conclusions". The Climate Change Committee is scheduled to meet
again on Oct. 17.
"The big member states do not yet have clear positions -
this is the case for most member states," another source said.
The carbon market traded a narrow range during Wednesday's
meeting, as the uncertainty deterred trade.
It is anxious for action as soon as possible to remove a
huge surplus of permits generated by recession that in April
pushed the market to a record low of 5.99 euros a tonne.
On Wednesday, the market was 1.21 percent higher at 7.55
euros by 1559 GMT.
Commission analysts have presented three options:
withholding 400 million, 900 million or 1.2 billion allowances
over the first three years of the market's next phase, which
begins next year.
"In our view, a number around 400 million would be a
disappointment to the market and would risk seeing prices trade
lower than current levels, while a number close to 900 million
or 1,200 million should in our view be enough to push prices
back towards 15 euros per tonne or higher over the second half
of 2013," Isabelle Curien, analyst at Deutsche Bank, said.
Poland, which is heavily dependent on carbon-intensive coal,
has consistently opposed anything that would drive the price of
emissions higher, arguing it would be an economic setback in
EU sources said Slovakia had also stated opposition to
backloading and earlier this month the Netherlands' environment
minister said the nation opposed the temporary withdrawal of
permits, known as backloading, because it would not address the
market's long-term problems.
EU sources said on Wednesday, the Netherlands was asking for
more time to develop its position following last week's
PERMANENT ACTION NEEDED
Britain, which has agreed a price floor, has said it
supports action to remove surplus allowances, but it wants the
permanent withdrawal of allowances, not a temporary backloading.
"The UK agrees with the European Commission that it is
important to act now to rectify the current situation in the EU
ETS," a spokeswoman for Britain's Department of Energy and
Climate Change said.
"The UK feels that it would be most effective to permanently
remove an ambitious quantity of allowances from the market now,
as a one-off intervention in the face of exceptional
Germany, Europe's biggest economy, has repeatedly struggled
to reach a position on many EU issues as its economy and
environment ministries fail to agree.
But German Christian Democrat parliamentarian Peter Liese
said members of the German parliament were calling for action
because of the need for ETS revenue.
"One of the most important arguments for an intervention in
the ETS is in fact that member states, for example Germany, have
planned their investment in low-carbon technology, mainly not
renewables but energy efficiency, carbon capture and storage and
others, on the assumption of a much higher carbon price," he
Within the business community, representatives of heavy
industry have opposed intervention in the carbon price.
Other sectors - including oil and gas firms eager to make
carbon capture and storage viable and to encourage
gas-generation rather than coal-fired power - have said they
support the Commission plan.
(Additional reporting by Angelika Stricker in Brussels and Ben
Garside in London, editing by William Hardy)