Tag Archives: parliament
Carbon Permit “Backloading” Fight Continues in European Parliament
A European Commission plan to delay the auctioning of millions of carbon permits received a new boost last week, after a European Parliament committee signed off on the proposal. The legislation must still be approved by the full Parliament later this summer, which had rejected an earlier version. The move to delay permit auctions – a practice known as backloading – is aimed at boosting the prices of such permits, which underpin the EU’s Emissions Trading System (ETS). An oversupply of permits, combined with the bloc’s broader economic struggles, has led permit prices to hover at dangerously low levels, reaching less than €3 per tonne in April and generally about €5 per tonne. The plan approved by the Parliament’s environment committee last week includes various changes from the original proposal, which EU parliamentarians had rejected in April. (See Bridges Weekly, 18 April 2013 ) One of the most notable modifications involves language assuring that backloading will only be a one-off event, if done at all. The European Commission would also need to conduct an impact assessment showing there to be no “significant risk” of companies in the sectors concerned relocating outside the EU. In addition, carbon credits would need to be returned to the market “in a predictable and linear manner,” beginning from the year after the last permit has been withheld. The original legislation had called for reintroducing these permits in 2019-20. As in the original plan, only 900 million carbon permits would be withheld – out of 1.7 billion currently in the market. Six hundred million of these would need to be made available for funding the development of low-carbon technologies. “We now have broader support for a solution that will allow the ETS to fulfil its purpose and support innovation to tackle climate change,” said Matthias Groote, a German member of the S&D group who serves as the legislation’s rapporteur in Parliament. Plenary vote in July The proposal will next face a vote by the full Parliament during its 3 July plenary session in Strasbourg. However, even if EU lawmakers sign off on the revised measure, it will still need the approval of individual EU governments, under the bloc’s co-decision rules. The proposal has been controversial in the EU, over concerns that delaying permit auctions could increase energy costs and lower confidence in the overall ETS. Others have also argued that the EU emissions scheme has broader structural problems that backloading alone cannot solve. “As I have always said, backloading is a quick, temporary fix,” Groote said last week. “Structural reform of our Emissions Trading System will follow to ensure it remains the cornerstone of EU’s climate policy and an inspiration to others around the world.” Opposition to the plan is largely expected to come from Poland, a country heavily reliant on coal, and Germany, which has spoken out about the potential for rising energy costs. The United Kingdom, meanwhile, has been a strong backer of the plan, calling also for deeper reform of climate change policy. Compromises render the proposal “toothless,” critics say Observers say that the upcoming plenary vote is likely to have important ramifications for the credibility of Europe’s carbon market and the bloc’s overall efforts to meet its climate change goals. The EU has said that it aims to have almost carbon-free electricity by 2050, and has pledged to reduce emissions by 20 percent from 1990 levels by 2020. However, the “watered down” nature of the new backloading proposal has drawn criticism from some environmentalists, who say that the compromises made in order to win over previous opponents have rendered the plan “toothless.” The new version “is now only a shadow of what it should have been,” said Greenpeace EU climate policy director Joris den Blanken. Though some environmentalists find that the proposal does not go far enough to address the ETS’ problems, private sector critics have argued that the proposed backloading could drive up the cost of doing business in the EU and push economic opportunities elsewhere. BusinessEurope, a lobby group of industrial and employers’ federations, has opposed the initiative, calling it an “unnecessary political intervention into the ETS market.” The group added that European industry is on track for meeting its 2020 carbon reduction target. ICTSD reporting; “EU politicians to try again to rescue carbon market,” REUTERS, 19 June 2013; “EU Parliament Committee Approves Proposal to Fix Carbon Market,” WALL STREET JOURNAL, 19 June 2013. Continue reading
Parliament Committee Votes To Prop Up EU’s Ailing Carbon Market
Published 20 June 2013 The European Parliament’s Environment Committee has given its support to a compromise plan to boost the price of allowances on the EU’s carbon market. To become law, the proposal to temporarily remove some of the glut of permits that has weighed on prices still needs to win backing from a plenary session of the parliament next month in Strasbourg, and from EU member states. Traders said the market had already priced in a positive vote and allowances on the EU Emissions Trading System (ETS) fell by 3.6% to €4.53 a tonne short after the vote on Wednesday (19 June). After a defeat of the proposal in a full session of the European Parliament in April, the carbon price fell to a record low of less than €3 a tonne. British MEP Chris Davies, spokesman for the Alliance of Liberals and Democrats for Europe on the committee, indicated that the deal was far from perfect. In a statement after the vote, he said the plan “amounts to little more than a modest regulatory adjustment. It will maintain the operation of carbon trading but it will not provide a driving force to promote long-term low-carbon investments.” “We still need to agree on clear targets for Europe’s CO 2 reductions by 2030 to give investors greater certainty”, Davies said, “and we urgently need to secure a global agreement on measures to tackle climate change.” Green groups welcome deal Campaigners welcomed the yes vote, although environmentalists say the proposal is very weak and will have a limited impact on prices. But they hope it will be a stepping stone towards deeper structural measures, such as the permanent withdrawal of some carbon permits. “With this vote the Environment Committee has sent an important political signal: there is still commitment to the EU’s flagship climate policy,” said Rob Elsworth of the campaign group Sandbag. The carbon market plan was meant to be a quick fix for a market that has hit a series of record lows far below levels of €40 to €50 needed to drive a shift to lower carbon energy. The proposal has met fierce resistance from heavy industry, which complains about anything that drives up the cost of energy in difficult economic times, and from Poland, whose economy depends on coal. Germany has failed to take a stand ahead of elections in September. Carbon prices have reacted to the twists and turns of the debate, which has dragged on for years. Price swings, often in excess of 10%, have been exaggerated by the weakness of the market. POSITIONS: Eurofer , the European steel industry association, voiced scepticism about the vote, saying backloading was an “unnecessary intervention” in the EU carbon market and that greater attention should be paid to industrial competitiveness instead. “The EU emissions trading scheme is working as it should and Europe is well on track to meet its 2020 reduction targets,” says Gordon Moffat , director-general of the European Steel Association. “Instead of artificially raising carbon costs the Commission must address the competitive disadvantages for industry resulting from European climate and energy policies.” There were some modifications brought by the Parliament’s vote which Eurofer welcomed as satisfactory, however. These include provisions to reintroduce carbon allowances that have been withheld from one year to the next and a new financing mechanism to reserve 600 million allowances for the development of innovative low-carbon technologies. “Of course these modifications might be regarded as improvements compared to the original version. It seems that there is less risk now of emissions allowances being removed from the market permanently,” Moffat said. “Still, the proposal represents market interference as well as additional, artificial increases in energy prices. It would have been more helpful if all the political energy that went into meddling with the ETS would have been invested in policies that strengthen the competitiveness of European industry.” Oxfam , the global anti-poverty group, said the Parliament committee vote had “sent a signal to markets that EU climate policy is here to stay”. However, it criticised the compromise deal for weakening the European Commission’s original proposal “substantially”. Lies Craeynest , Oxfam’s EU climate change expert, said: “The upcoming structural reform of the ETS will need to be much more ambitious to help stave off dangerous climate change which threatens the food security of millions around the world. “The proposal for a new fund makes lots of sense but it should be aimed at funding real climate solutions at home and meeting the EU’s promises to help poor countries deal with climate change abroad, rather than propping up energy-intensive industries.” NEXT STEPS: 1-4 July : European Parliament to vote on proposal at a plenary session in Strasbourg. Continue reading
Cap and Trade Collapses
EVIEW & OUTLOOK EUROPE April 17, 2013 Cap and Trade Collapses Even the European Parliament rejects carbon price-fixing. One of the great policy bubbles of our times has been cap and trade for carbon emissions, and on Tuesday it may have popped for good. The European Parliament refused to save the EU’s failing program, which is the true-believer equivalent of the pope renouncing celibacy. The Parliament in Strasbourg voted 334-315 (with 63 abstentions) against propping up the price of carbon credits in the EU Emissions Trading System. The failed proposal would have delayed the scheduled sale of 900 million ETS permits over the next seven years, thereby suppressing supply. After carbon traders realized they weren’t getting more artificial scarcity, they drove the price of emissions permits down by 40% at one point on Tuesday. EU carbon permit prices have collapsed as the Continent’s economic crisis curbs energy demand. Utilities and industrial firms have less need to emit CO2 above their statutory limits. Total emissions in the EU fell by nearly 10% between 2007-2011, according the most recent data. The low price of carbon allowances is good for consumers who don’t have to absorb the extra regulatory cost in what they pay for energy. Anticarbon crusaders never give up, however, so they wanted the Parliament to intervene to prop up permit prices. They want higher-than-market prices for fossil fuels because they know that is only way they can force the production of renewable energy that is otherwise uncompetitive. The Parliament majority rightly judged that raising energy prices for companies and households is ludicrous when Europe is barely growing as it is. This failed political intervention also gives the lie to the claim that cap and trade is a “market solution” to climate change. Proponents only like the market in permits when it keeps carbon emissions prices high. Cap and trade is an attempt to use brute political force to limit the supply of carbon energy. All of which vindicates the Bush Administration and others who opposed cap and trade in the Kyoto Protocol. Aided by Al Gore, Europe tried to turn cap and trade into a global policy. The hot air started to go out of Kyoto after its early backers refused to implement job-killing legislation to meet emissions targets. It lost further support when it became clear that financial firms were gaming the system. With the U.S. shale fracking revolution, it’s now clear that the fastest way to reduce greenhouse gases is to let private drillers expand natural gas production. When even Europe recognizes the folly of artificially raising energy prices, the anticarbon obsessives have lost in their own climate-change temple. Continue reading
