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Mon Sep 01 23:08:33 SAST 2014

EU parliament support grows for carbon market rescue: climate boss

Reuters | 24 June, 2013 16:09
Smoke billows from the chimneys of a coal-burning power station. File picture
Image by: DAVID GRAY / REUTERS

Politicians previously sceptical about the EU Emissions Trading Scheme (ETS) have sent out more favourable messages ahead of a crucial vote in the European Parliament next week, the European Union’s climate boss said on Monday.

The European Parliament’s environment committee gave its backing last week to a plan to support the ETS, the European Union’s carbon market, by temporarily removing some of the surplus allowances that have pushed the market to record lows.

Now the plan, known as backloading, must clear a plenary session in Strasbourg on July 3 as well as get the backing of EU member states to become law.

“In recent weeks we have heard new messages from some of those in the Parliament who had previously been more sceptical that they are beginning to understand that it is the trading system’s future that is at stake,” Climate Commissioner Connie Hedegaard told reporters.

She said she believed the 27 different member states would each adopt their own systems if the EU-wide carbon market were to fall apart.

“What is at stake is: Should Europe have a market-based system, a market-based price for CO2, or should it instead have a patchwork of 27 different systems? And I think that most people know very well what makes the most sense for Europe,” she said.

Hedegaard was speaking in Luxembourg, where she addressed a meeting of EU foreign ministers, who debated the international security risks of failing to manage climate change.

The European ETS was designed to help persuade operators of power plants and factories to switch to greener energy, but the prices for CO2 emissions allowances need to be much higher to drive such change. On Monday, they were just above 4 euros a tonne.

Debate has rumbled on for years about how to strengthen the ETS, but the Commission’s plans have run into fierce opposition.

To try to win over doubters, politicians have amended the backloading proposal. Analysts say that it can no longer have much impact on the market in itself but that a “yes” vote for the plan still would have value as a signal of political support.

European heavy industry is particularly sensitive to any higher costs related to energy at a time when US rivals are benefiting from cheap shale gas.

On the other hand, some energy firms, especially utilities, strongly favour the EU ETS, seeing it as the cheapest way to drive innovation in renewable energy technology.

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