Brussels, 03/12/2014 (Agence Europe) - MEPs on the Parliament's environment committee, which is chaired by Giovanni La Via (EPP, Italy) gave their full support on Wednesday 3 December to robust structural reform of the European carbon market (ETS) through the creation of a market stability reserve. On 22 January of this year, the Commission proposed that, with effect from 1 January 2021, a percentage of surplus quotas would be placed annually in reserve, according to a predetermined methodology.
In the committee's first debate on this piece of draft legislation for an action framework for climate and energy policies until 2030, all the members felt that the report being prepared by Ivo Belet (EPP, Belgium), strengthening the proposal, provided an excellent starting point, a balanced text.
Rapporteur Belet was delighted that the committee's discussion was taking place at the same time as the United Nations climate talks in Lima (COP 20) and noted that, at a time when major economies (China and the United States) are progressing, “Europe will have to put its own house in order”.
Belet said he was certain that a stability reserve would sustainably correct an initial shortcoming in the ETS, which is a major market instrument for EU climate policy but one that is not working properly since the very low price of carbon does not incentivise investment in clean technologies.
He said that this reserve would allow the surplus of emissions allowances, estimated at over two billion, to be usefully addressed. He is not challenging the date of 1 January 2021 for implementation (the start of the fourth trading period), keen to build confidence among companies. On this point, however, there were some differences of opinion, with a number of MEPs wanting to bring the date forward to 2017 or even earlier.
The changes he is proposing seek principally to: - have the 900 million emissions allowances to be put directly into the stability reserve - 300 million should be re-injected onto the market in 2019 and 600 million in 2020: there is no other option, a way has to be found to prevent the collapse of the market, warned Belet; - provides reassurance to energy-intensive companies which are exposed to the risk of carbon leaks by pursuing the debates on improving free allocation of allowances and, in particular, on variations in production levels (in line with the conclusions of the European Council of October); - ask the Commission to present the revision of the ETSD directive as soon as possible; - make the stability reserve more responsive and provide for an earlier review clause; - move €30 million from the reserve to investment in low-carbon industrial technology and processes (extension of the NER 300 programme).
The deadline for putting down amendments is midday on 11 December. The ITRE committee vote is scheduled for January and the ENVI vote for 23 and 24 January.
Matthias Groote (S&D, Germany) argued for a more ambitious starting date and for the withdrawal of certificates and frozen allowances. The stability reserve had come at just the right moment, he said, adding that progress had to be made on this allowance-management instrument. The only alternative would be fiscal, he suggested, noting that there is no harmonisation of fiscal policies. Ian Duncan (ECR, UK) said that, within his group, some would prefer to see the stability reserve operational quickly while others think that starting later would allow more people to be ready on time.
Gerben-Jan Gerbrandy (ALDE, Netherlands) stated that his group supported the swift removal of frozen allowances and backed implementation of the reserve as quickly as possible, by 2017 at the latest. He welcomed Germany's taking the leading role on this matter (see EUROPE 11128) and was pleased to see a majority within the Council wanting a stronger proposal.
In the opinion of Peter Liese (EPP, Germany), it is time to cancel the frozen credits and he says the reserve should be capped at one billion. That, he opined, is perfectly sufficient.
“We should apply the system from 2017, or even sooner. It's a matter of the credibility of the system. The planet cannot wait any longer”, argued Eleonora Evi (ELDD, Italy).
Margrete Auken (Greens/EFA, Denmark) called for the reserve to come into effect by 2016. “The system is not working. It is we who are paying the polluters”, she said. She gave warning that the China-US agreement must not be under-estimated because, “if we don't repair the ETS quickly, we will lose our comparative advantage in clean technologies”.
The Commission representative pointed out that the October European Council's political guidance shows that free allocation of allowances will continue until 2030 in order to maintain the competitiveness of energy-intensive sectors. The representative recalled the assurance given by Miguel Arias Cañete that, if a majority in the Parliament and in the Council backed early application of the reform, the Commission would not oppose it. (AN)