Brussels, 05/05/2015 (Agence Europe) - An inter-institutional agreement seemed to be within reach, late afternoon on Tuesday 5 May, as negotiators of the Parliament, the Council and the European Commission were getting their second trialogue meeting in Brussels underway on the proposed structural reform of the emissions quota trading system of the EU (ETS), with the creation of a European carbon market stability reserve (see EUROPE 11283).
Armed with a new mandate conferred upon it by the permanent representatives of the member states (Coreper) by way of compromise, the Latvian Presidency of the Council was getting ready to negotiate the early launch of the reserve on 1 January 2019, instead of 2021 as initially proposed by the European Commission. The European Parliament for its part proposed bringing the reserve forward to late 2018 (see EUROPE 11265).
As regards the 900 million in quotas, the auctioning of which was frozen last year as part of the short-term reform of the ETS, the Council is now, like the Parliament, in favour of this money being paid directly into the reserve.
The unallocated quotas set aside for market newcomers or arising from the closure of industrial installations may also be paid directly into the reserve.
“If the stability reserve enters into force earlier and the 900 million in quotas are paid directly into it, there will be no drop in carbon prices until the reserve enters into force”, an expert stressed on Tuesday.
This means that the positions of the Council and the Parliament are no longer very far apart. “An agreement is likely”, one diplomat commented on Tuesday. However, it is possible that the definitive blessing of Coreper and the various political groups at the Parliament will be deemed necessary before an inter-institutional agreement can be announced.
The European Parliament is also likely to take this opportunity to repeat its long-standing calls for the revenue generated by the auctioning of the quotas to be earmarked for innovation and, in any case, to fighting climate change. It argues that a few months ahead of the Paris climate conference (COP 21, December 2015), an assurance of this kind would give the EU credibility by showing that it is applying the polluter-pays principle to the industrial sector. However, the Council has always said that it could not accept this, on the grounds that the EU has no competence to dictate to the finance ministers how to use revenue fed into the national budgets. However, this issue is unlikely to block an agreement.
Czech Republic buries blocking minority. At the meeting of Coreper on the evening of Wednesday 29 April, the Latvian Presidency and the countries in favour of bringing the reform forward succeeded, following lengthy discussions, to persuade the Czech Republic to get behind this compromise. This removed the blocking minority preventing any agreement at the Council and quashed Poland's hopes of sticking to the date of 2021.
“The date for its entry into force is of the utmost importance. 2021 was the date of the initial proposal agreed by the Council. Any attempt to change the date is not acceptable for Poland and for EU companies. You cannot change the rules in the middle of the game. Business must have some certainty as to the basis on which it is operating. It needs stability on the market. The European Parliament is a strong advocate for an earlier date, but the blocking minority cannot be ignored”, a Polish diplomat explained to EUROPE, before the Czech U-turn at Coreper. (Aminata Niang)