* Dominant EU member Germany has yet to take a stance
* EU politicians to meet again on the issue next week
* Member states to debate separately, also next week
By Barbara Lewis and Nina Chestney
BRUSSELS/LONDON, Feb 19 European lawmakers
backed an emergency plan to save the world's biggest market for
carbon allowances from collapse on Tuesday, but put off drafting
the necessary legislation, sending prices down by as much as 20
The carbon market, a pillar of the European Union's climate
policy to cut greenhouse gas emissions, has hit a series of
record low prices because of a huge surplus of allowances,
mostly caused by economic recession in the euro zone.
The Commission's proposed plan, referred to as backloading,
entails temporarily removing some of the surplus that has pushed
prices far below the levels needed to make low carbon investment
profitable as part of efforts to curb planet-warming emissions.
On Tuesday, members of the environment committee of the
European Parliament gave their support to the plan by 38 votes
in favour, 25 against and two abstentions. But they said they
needed time to decide on a possible mandate for negotiations on
wording of legislation.
They are now expected to decide next week whether to take
the discussion straight to a plenary session of the European
Parliament, expected in April, or whether to speed up the
process by kicking off legal haggling between the parliament,
Commission and member states before then.
The European Commission had hoped backloading would be a
quick fix pending deeper reform, but it has run into opposition
from member state Poland, which relies on carbon-intensive coal
for most of its energy, as well as some in industry and
The views of member states will be sought at a committee
meeting on Feb. 27. Dominant EU member Germany has yet to take a
Carbon prices plunged to a 12-day low of 4.09 euros a tonne,
which compares with an all-time low of less than 3 euros per
tonne in January.
The market later recovered slightly to end the day down 8.6
percent at 4.68 euros.
Traders said that carbon prices had rallied strongly in
anticipation of a positive vote, reaching 5.52 euros on Monday,
the highest in almost a month.
"The fast-track mandate is an option and not a requirement.
The fact Parliament did not decide today will likely prove
inconsequential," said Matthew Gray, analyst at Jefferies Bache.
"Beyond the 'buy the rumour, sell the fact' element, the
price decline likely came from disappointed traders who were
expecting an intraday rally to maximise profit-taking
At every stage, the debate has been intense.
Climate Commissioner Connie Hedegaard in a tweet welcomed a
"clear, positive vote", while Polish Environment Minister Marcin
Korolec said, also by Twitter: "Common position still far away".
Those supporting the Commission emergency plan to remove
some of the surplus of carbon allowances say the action is
essential as a first step to deeper reform.
Otherwise, the energy industry could face a decade without
any kind of investment signal, and carbon emissions would almost
certainly rise as there would be no deterrent to burning
"This outcome signals the intention of the European
Parliament to begin the process of restoring the most
cost-effective approach to meeting Europe's energy needs and
reducing emissions over time," said David Hone, chief climate
change adviser at Royal Dutch Shell.
Those against the plan say the carbon market's weakness is
just a reflection of low demand in difficult economic times and
that action to boost the carbon price would increase energy
prices, reducing EU competitiveness on world markets.
Even those who support it are very clear more is needed.
"The Parliament's support today can only be a first step
towards reinforcing the ETS in the longer term," said Hans ten
Berge, secretary general of Eurelectric, which represents the
electricity industry in Europe.
"Policymakers must now turn their attention to addressing
structural measures that can provide a clear pathway for carbon
emissions reduction beyond the third trading period and up to