European emissions trading scheme

MEPs call for reserve from 2019

Tim Altegör, 16 Mar 15
European Parliament Environment Comittee votes for a reduction of the allowances for carbon emissions in 2019. This would be a real chance of survival for the trading scheme say enviromental organsiations. But at least the final decision will depend on negotiations among the Parliament, the Commission and the member states.

When should the number of allowances in the European emissions trading scheme be reduced, 2017 or 2021? 2019, say the members of the European Parliament Environment Comittee.

However, environmental associations are insisting on the earlier start date, as is the German energy sector. The diagnosis is plain: the European carbon trading scheme suffers from a structural problem. In theory, the allowances are supposed to increase the cost of harmful carbon emissions to such an extent that climate protection measures make economic sense for companies.

As there are far too many of these allowances in circulation, the cost of emitting a tonne of CO2 has slumped to less than EUR 10. The intended price was originally EUR 30. There is even widespread consensus on a possible fi: excess allowances should be held in a so-called market stability reserve, making them scarcer and thereGeneva (kd) Diplomats from around the world have agreed on a draft text for a global climate treaty during meetings in Geneva.

However, as reported by the German Environment Ministry, the draft offers multiple options rather than defiitive answers for many issues. It calls on individual countries to quickly begin negotiating specifi legal wording for the document. A fore more expensive. If prices become too high, the market can be topped up again by drawing on the reserve. The only problem is, no one can agree on when the reserve should come into force.

The European Commission proposes the year 2021, and plans to present a comprehensive reform for the period beginning in 2020. However, the German government and some other member states want the reserve to begin as early as 2017. What is more, they want the 900 million allowances temporarily withheld from the market under the backloading scheme to be transferred directly to the reserve.

The same demand is now being made by the European Parliament Environment Committee. On 24 February, MEPs voted for a compromise: the reserve will come into force in 2019. Environmental organisation WWF praised the deadline, calling it ambitious by comparison to the one suggested by the European Commission. The Commission’s proposal “brought tears to the eyes of climate advocates,” said Juliette de Grandpré, spokesperson for EU Climate Policy at WWF’s German branch.

Christoph Bals, policy director at environmental organisation Germanwatch, spoke of a “turning point”, saying that the emissions trading scheme now has a real chance of survival. However, both insisted on the importance of an even earlier start, in 2017. They are joined in this respect by Hildegard Müller, Chairwoman of the German Association of Energy and Water Industries (BDEW). According to them, the vote was a wasted opportunity. In any case, it has only symbolic value – the final decision will depend on negotiations among the Parliament, the Commission and the member states

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