Brussels, 30/04/2013 (Agence Europe) - With the price of carbon that has fallen below €3/tonne in the EU and the vote by the European Parliament which momentarily threatens short-term reform of the European Trading System (ETS) for greenhouse gases (see EUROPE 10828), bets are open on the fate reserved to that reform and on the ability of the European carbon market to provide incentive for investment in energy efficiency and clean technologies. Work within the EU Council is continuing, nonetheless, EU sources reiterated on Wednesday 30 April, still hopeful that an agreement will be reached at first reading in co-decision by the end of the year.
The same sources say that the next meeting of the Council working group is scheduled for 27 May. Member states will have time to adjust their position. In the meanwhile, there will have been a plenary session of the European Parliament, on 20 May, they explain, saying that this gives them time to move forward as far as possible before the end of the Irish Presidency of the EU Council in five weeks' time. While refusing all prognosis, they do not consider it impossible that there will be “movement” within the environment committee of the Parliament, within the time left for finding a compromise, and they plan to prepare for any eventuality.
Since the EP plenary vote that referred back to parliamentary committee the European Commission's proposal aimed at amending the ETS directive to defer the trading timetable with a temporary freeze (“backloading”) of 900 million surplus quotas on the carbon market at the beginning of the third trading period (2013-2015), which would be gradually reintroduced on the market between 2016 and 2020, all eyes have turned to the Council. The informal meeting of the Environment Council of 23 April in Dublin was not of very much use when it comes to reassuring markets or the fiercest supporters of urgent ETS reform for remedying dysfunction (see EUROPE 10833).
EU senior officials pointed out that, within the Council, a large number of member states are now likely to support the proposal, while a small number are definitively opposed (Poland for example) and another small number has not yet reached a stance (Germany and Spain). In their view, it is difficult to predict what will happen in parliamentary committee as several scenarios can be envisaged. The committee could either re-examine the text in order to identify which amendments could muster a majority, or reaffirm its initial position, or send the text back to plenary. Given the large number of abstentions during the plenary vote on 16 April, any movement will be decisive. Amendments could be on the frequency of market intervention, the volume of quotas concerned, or the circumstances in which intervention can be triggered.
MEPs could measure the impact that the vertiginous fall in the price of carbon per tonne (to €2.80/tonne) would have on member states, the EU senior officials say. They say that, if the Parliament takes a stance by end May, the Council will react fast and will be as flexible as possible to adjust to any changes. If there is another vote, this could reflect the dialogue taking place in the capitals with MEPs. The only thing that the Council can do, they say, is to be as prepared as possible to face any contingency.
Some observers believe the difficulties experienced in agreeing on a minor short-term reform augur ill for longer-term reform of the carbon market and for the battle to bring the price of carbon up from €3 (to between €6 and €7). However, these European sources take the view that there are positive signs in favour of ETS, such as the link established with the Australian carbon market, and the White Paper on the future integrated framework for climate and energy policies by 2030 (see EUROPE 10816), which has Parliament's support and can usefully fuel reflection on structural measures. They say they shall continue to work on this proposal and that parallel consultation on the objective for 2030 has generated fresh momentum. (AN/transl.jl)