MEPs likely to back ETS compromise plan

Parliament’s environment committee to vote on ‘backloading’ proposal.

Parliament in brief

Notebook

The European Parliament’s environment committee appears likely to adopt compromises put forward by Austrian centre-right MEP Richard Seeber in a vote next week (19 June) on the European Commission’s proposal to ‘backload’ allowances in the EU’s Emissions Trading Scheme (ETS).

Centre-right MEPs have been divided into three camps on the backloading issue. There is a group supporting it, led by German MEP Peter Liese. There is a group which flatly rejects it, led by Finnish MEP Eija-Riitta Korhola. And there is a third group of MEPs who rejected it the first time but is now considering passing it with new compromises, led by Seeber.

At a meeting in Strasbourg on Wednesday night (12 June), the centre-right EPP group leaders agreed to support a compromise amendment put forward by Seeber that would reintroduce the allowances much earlier than envisioned by the Commission – one year later rather than in 2018 to 2020 as planned. Revenues from 600 of the 900 million allowances temporarily removed should be earmarked for aid to Europe’s energy-intensive industries.

Lastly, the allowances could only be backloaded if the Commission has determined that doing so will not cause ‘carbon leakage’ – the phenomenon of industries moving out of Europe to avoid climate legislation. This idea was first put forward as a compromise by centre-left MEP Matthias Groote, who is guiding the legislation through the Parliament.

Such a rapid introduction of allowances would likely not raise the carbon price as envisioned by the Commission, analysts warn, which could render the measure useless. The Greens are refusing to back this compromise amendment.

Despite the fact that the compromise has been backed by the EPP group leaders, many individual members will still vote against it. Korhola will still vote to reject the entire proposal, her office said. British conservative MEPs will also maintain their opposition.

Seeber is thought to have convinced enough EPP MEPs to vote yes in committee next week to enable passage. But the full Parliament vote next month remains unclear. Seeber has assured his colleagues that his compromise can get enough EPP members to change their mind in a full parliament vote. The full Pariament rejected the proposal in April after the environment committee had passed it in February.

Industry fears

Heavy industry has not been convinced by the compromises, fearing that the Commission would in any event conclude that there would be no carbon leakage, and industry lobbyists in Strasbourg this week were urging the committee to reject backloading completely.

The European Council has yet to agree a stance, because Germany has not taken a position. Philipp Rösler, Germany’s economy minister, is against, while Peter Altmaier, the environment minister, is in favour, but has said that a positive vote from the Parliament is needed before Germany can support backloading.

A rejection by the environment committee is being depicted as a mortal blow to the proposal. Carbon market analyst PointCarbon has warned that unless a fix to the low price in the ETS is found quickly, the scheme could be doomed to irrelevance.

However, traders appeared to have rising confidence that a compromise will be agreed in the committee next week, with the price of carbon rising above €4/tonne on Tuesday (11 June).

Click Here: Golf special