LONDON Nov 27 Germany's new coalition
government, while backing the EU's backloading plan to delay the
sale of 900 million carbon emission permits, will oppose any
move to cancel them permanently, a coalition document showed.
Chancellor Angela Merkel's conservatives clinched a
coalition deal with the Social Democrats early on Wednesday that
puts Germany on track to have a new government in place by
Christmas following two months of negotiations.
According to the 185 page document, the coalition appeared
to reject any additional move to cancel permits under the
Emissions Trading Scheme (ETS).
"It must be ensured that (backloading) is a one-off
intervention in the system and that certificates are not
permanently withdrawn from the market and there are no adverse
effects to the competitiveness of affected sectors or industry
jobs," the document said.
The Commission proposed backloading as a quick-fix measure
to incentivise companies to invest in green technologies by
propping up prices that have plunged to near-record lows below 5
EU lawmakers agree on backloading and are expected to
formally sign off on the bill next month.
Analysts expect backloading to push prices into double
figures in the ETS, which regulates around half of EU greenhouse
gas emissions by forcing companies to surrender one permit for
every tonne of CO2 they emit.
But without further reform, the permits are due to return to
the market at the end of the decade, potentially sending prices
down to current levels.
A permanent cancellation of the backloaded permits is one of
three options the European Commission is considering proposing
in January and has been strongly supported by
It would need to be agreed by the European Parliament and
the council of member states in a legal process that could take
up to two to three years.
"The coalition document is not binding on the government,
but the wording is clear and does not allow much room for
interpretation," said Marcus Ferdinand, an analyst at Thomson
Reuters Point Carbon.
"Given that Germany is an important member state, when it
comes to decision-making procedures on the European level, I
would see chances for a permanent cancellation being lowered
with the adoption of the coalition contract," he added.
The document also said the coalition was committed to an EU
move to cut its overall greenhouse gas emissions by at least 40
percent by 2030, in line with a level suggested by the EU
Commission and backed by France and a handful of other member
(Reporting by Ben Garside; editing by Jane Baird)