Towards a Compromise 2018 Start Date: MEPs to Set Deadline for Carbon Reform

Written by | Tuesday, February 17th, 2015

European politicians are going to try to overcome disagreements over the efforts to prop up the EU carbon market by setting a compromise 2018 start date for an overhaul of the Emissions Trading System (ETS). In order to support carbon prices and encourage the industry to switch to more renewable types of energy, the EU Commission has come up with a plan to get rid of surplus carbon allowances from the trading system beginning in 2021. Some Member States, such as Germany and the United Kingdom, aimed to start sooner, by 2017. Both countries support zero-carbon system based on nuclear or renewable energy. In contrast, coal-dependent Poland disagreed claiming that the original proposal was too soon.

MEPs are now readying for the next vote on the market reform within the environment committee on 24 February. A compromise date is allegedly 31 December 2018, although Green and Liberal politicians are still lobbying for 2017. Traders and businesspeople already said that even 2018 would be somewhat difficult for the market. “If this (date) goes through in the vote in ENVI (the environment committee), I would expect prices to rise,” an anonymous trader commented. In response to the speculations, ETS allowances went up by about 2 percent to €7.60 already on Friday (13 February), which is nevertheless still far from the record €30 in 2006. Under the ETS, polluters have to pay for their emissions, but the surplus of more than 2 billion carbon allowances surprised the market.

The final compromise is expected to be reached this week during a preparatory meeting of the parliamentary groups. However, even if the environment committee passes it, more votes will be needed. A draft document that will be discussed stipulates that 900 million allowances should not be auctioned between 2019 and 2020 but rather placed in the reserve.

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