EU carbon market “backloading” fix is approved by EU Council
There have been a lot of meetings to solve the problem about the oversupply of allowances in the EU carbon market, which covers around 11,000 installations across the 28 member states. Finally, the EU Council has approved plans to consider a temporary fix to the bloc’s troubled carbon market.
Officials from member states voted almost unanimously to start discussions with the EU Parliament to remove 900 million carbon allowances from circulation until 2020. This measure is known as backloading.
Prices of carbon allowances have plummeted over the past two years due to the glut and the economic crisis. They fell below €3 earlier this year – less than a tenth of the price analysts say is needed to drive low carbon investment on a large scale. The Commission is expected to table a more permanent solution to prop up the market by the beginning of next year.
The 28 EU governments and the European Parliament must approve the backloading proposal before it becomes law, so market participants do not expect permits to be withdrawn until the middle of next year.
EU Climate Action Commissioner Connie Hedegaard showed his happiness on Twitter: “Finally! Endlich! #Backloading through in Council! Common sense prevailed. Almost unanimous support from MSs. Moving toward a stronger #ETS”, she wrote.