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TagsOslo, 16 May 2012
Reuters Point Carbon: The EU’s climate chief on Tuesday said an upcoming EC proposal to delay sales of allowances is just the “first step” in repairing the bloc’s CO2 market and her department will before the summer outline additional options to reform the structure of the scheme. Connie Hedegaard told reporters in Brussels the EC would, in a review of the scheme, outline several ways for member states to boost carbon permit prices that are trading near record lows after a slump in European manufacturing has left the market oversupplied.
“It’s not that one should expect backloading (permits) in itself will do the whole trick and then suddenly the price will be very much bigger,” she said.
“Whereas options to a more structural addressing of the problem of the too-low price in the system... that’s a more complicated process.”
EU institutions are considering several ways to give carbon prices a boost from about 6.50 euros to a level that encourages the private sector to invest in clean technology.
The Commission is expected to table a motion in time for member states to agree before the end of the year to delay hundreds of millions of permits from the early years of phase three of the scheme until later in the 2013-2020 trading period.
Analysts say, however, that that would have little price impact unless the EC takes steps to permanently remove some of the 2.4 billion surplus that the scheme is expected to have by 2020.
But so far, the EU executive has been reluctant to propose a permanent reduction in the number of allowances as it could take at least two years and it is not guaranteed to garner support from member states that fear a higher carbon price could kill jobs.
Instead, Hedegaard’s department will hope to pressure member states to take action by outlining further price supportive measures in the review, including accepting a lower emissions target as well as permanently removing allowances from the 2013-2020 phase of the scheme.
A third option to boost carbon prices is to amend an Energy Efficiency bill that is working its way through Brussels’ lawmaking process.
Parliamentarians are insisting that the bill should include a measure to cut supply of permits, but ministers have objected, hoping instead that parliamentarians will see the EC proposal to delay sales as a compromise.
Ends --
Source: Thomson Reuters Point Carbon - for Commodities Now
