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UPDATE 2-EU countries edging towards CO2 market fix-EU Presidency
March 21, 2013 / 4:10 PM / 5 years ago

UPDATE 2-EU countries edging towards CO2 market fix-EU Presidency

* Carbon price rallies

* Crucial vote in European Parliament next month

* Debate on deeper structural reform also under way

* Poland reiterates opposition (Adds quotes, updates price)

By Barbara Lewis

BRUSSELS, March 21 (Reuters) - European Union member states are making gradual progress towards agreement on an emergency fix to support the carbon market, which has sunk to record lows, a spokeswoman for the EU Presidency told reporters on Thursday.

“The position in the council (of member states) is making progress towards majority support,” the spokeswoman said.

Ireland, as holder of the rotating EU presidency, takes a neutral stance as it leads negotiations between the European Commission, the Parliament and member states.

The Commission last year proposed temporarily withdrawing some of a huge surplus of carbon allowances from the EU Emissions Trading Scheme (ETS) to try to prop up prices, which have collapsed to a series of record lows.

On Thursday, allowances were trading nearly 8 percent higher at 4.27 euros by 1536 GMT, up from an all-time low of less than 3 euros in January.

The Commission had hoped its proposal would be a quick fix, pending deeper structural reform, but the plans, which require a technical legal amendment and agreement on how many allowances to withdraw, have encountered entrenched resistance.

Energy intensive industries and coal-intensive Poland have been at the forefront of opposition, while dominant member state Germany, facing an election year, has refused to take a stance.

Poland has this week reiterated its position.

In a Brussels discussion on Wednesday, Beata Jaczewska, Poland’s deputy environment minister, said the weakness of the ETS was just a reflection of the economy.

“The European economy is collapsing, not the ETS. The ETS is just the effect of it. Maybe we should be working more effectively on fixing the economy,” she said.

On Thursday, a Polish EU source said it was too early to consider long or short-term fixes for a market, which has only just entered a new phase (2013-2020).

“We need to see how the ETS is working to assess it properly,” the source said on condition of anonymity.

LOOMING PARLIAMENTARY VOTE

Debate in the European Parliament is running in parallel with the member state debate.

In a non-binding decision earlier this month, the European Parliament backed by a margin of a mere three votes, with 32 abstentions, a text urging the Commission to “adopt measures to correct the failings of the ETS”, as part of debate on a 2050 road map towards a sustainable and carbon-free energy system.

The decisive parliamentary vote will be next month in Strasbourg, when a rejection would kill off the Commission plan for any quick fix to the market’s problems, EU sources said.

However, the Commission has also put forward long-term structural reforms, including permanently, rather than temporarily, removing allowances.

Those measures will be debated further over the coming months, together with 2030 policy goals, which a Commission draft document suggests should include a target to cut carbon emissions by 40 percent compared with 1990 levels, up from the 20 percent cut by 2020. (Additional reporting by Nina Chestney in London, editing by Alison Birrane and William Hardy)

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