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EU efforts mount to save carbon market

London, 12 April 2013

Ministers and lawmakers have ramped up pressure on MEPs in a last ditch attempt to persuade them to back a plan to rescue the EU’s carbon market, claiming if they vote down the Commission’s so-called backloading bill they would tear up European climate policy and damage industry. Ministers from Germany, Britain, France, Italy, Sweden and Denmark have written to MEPs urging them to pass a bill on April 16 that will delay or backload the sale of hundreds of millions of carbon permits in the EU Emissions Trading Scheme (ETS).

“Without sustainably strengthening the ETS, eight years of climate action will be lost, creating a serious threat for the existence of our most cost efficient climate policy instrument,” the ministers wrote.

They said without a higher carbon price, industry would invest in carbon intensive technologies, such as coal-fired power stations, locking in decades of carbon dioxide (CO2) emissions that contribute to global warming and jeopardizing the EU’s long-term goal to cut emissions 80 percent by 2050.

The proposal, which analysts say could temporarily double carbon prices trading at 4 euros, is meant to be a precursor to wide-spread reform of the $148-billion scheme that will lead to deeper emission cuts and a much higher price on emitting CO2, the main gas blamed for global warming.

However, the outcome of Tuesday’s vote is too tight to call after a smaller committee passed the measure by just three votes last month.

PLEAD

Proponents of the bill now fear that many MEPs will vote without fully understanding the significance for climate policy. This week German MEP and a supporter of higher carbon prices Peter Liese sent a letter to his fellow lawmakers urging them to vote through the bill or risk having no European climate policy at all.

“The matter is, in a certain sense, about the question whether or not we want to have a European climate policy, yes or no,” he wrote in a briefing paper that also explained what the EU carbon market is.

“I plead thoroughly for the acceptance of this proposal for backloading and afterwards for a solid discussion about the future design of the ETS,” he said in the paper, adding that without backloading a separate debate on structural reform may not emerge.

Chris Davies, a UK Liberal MEP who also supports the measure, wrote to UK Conservative MEPs on Wednesday, urging them to vote it through in line with British government policy.
“British MEPs could determine the outcome. Liberal Democrats and Labour members will all be supporting backloading ... To vote against would undermine the policy of their own government,” it said.

CONTROVERSIAL

The notion of intervention is controversial and the proposal has been the subject of intense lobbying by both environmental groups who claim it is necessary to meet long-term goals to cut emissions of greenhouse gases and European industry who says it will cost jobs by forcing energy prices higher.
The main lobby group for the steel industry – Eurofer – says that for every 1 euro increase in the carbon price it adds 190 million euros to Europe’s energy bill and has urged lawmakers to reject the proposal.

“It seems obvious that all political measures adding to the cost base of industry should be avoided in the present, dramatic situation. With its recent proposals, the European Commission is fuelling risk aversion and stifling growth,” Gordan Moffat, head of Eurofer wrote this week in an open letter published on Euractiv.com

With just two working days to go before the vote, most parties remain split. Proponents hope to persuade a significant minority of members of the centre-right European People’s Party, the EU’s biggest political group which is against the bill because of fears it may cost jobs, to pass the measure.

“We are committed to reject (the) proposal and it is a key vote,” said Eija-Riitta Korhola, an EPP member.

Ends --

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