February 16, 2012 / 1:10 PM / in 6 years

EU politicians agree compromise text on CO2 allowances

BRUSSELS (Reuters) - European parliamentarians have agreed to compromise wording ahead of a vote this month that is expected to increase pressure on the Commission to remove carbon allowances to prop up prices on the EU Emissions Trading Scheme which have plumbed record lows.

The news helped carbon prices, with the benchmark contract up nearly 4 percent at 8.68 euros per tonne at 1250 GMT.

The compromise text, as widely expected, does not specify how many carbon allowances might be withheld to tackle a huge surplus in the market.

Instead, it calls on the Commission to amend regulation on auctioning carbon permits and to implement measures, which may include “withholding the necessary amount of allowances,” a parliamentary source told Reuters.

“The good thing is it is giving the Commission a mandate to act before the third phase (of the carbon market from 2013). However, we lost the numbers. It was just not possible to get broad support,” Dutch Green MEP Bas Eickhout told Reuters.

He said the negotiators from all parties supported the compromise agreed late on Wednesday and there was “a good chance” it would get voted through on February 28.

That would be no guarantee that the Commission would decide to act, but it would add to pressure for reform that has come from industry and business, as well as politicians and environmentalists.

The European Parliament’s industry committee on February 28 will vote on the proposed amendment as part of a wider debate on a new law on energy efficiency.

In December, a meeting of the parliament’s environment committee voted for action, garnering cross-party support, which briefly triggered a nearly 30 percent surge in the price of EU allowances (EUAs).

That vote went further than the new text by backing the withdrawal of 1.4 billion permits, but that number was only passed by one vote and politicians predicted then that it would be hard to retain such a specific proposal.

Reporting by Barbara Lewis; editing by Jason Neely

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