Reforms aimed at raising prices on Europe’s carbon market are likely to be agreed by the end of June
Reforms aimed at raising prices on Europe’s carbon market are likely to be agreed by the end of June at the latest.
Peter Zapfel, head of unit implementation of the ETS (Emissions Trading System) at the European Commission, said he had every confidence that the Latvian presidency of the EU would be able to broker an agreement before its rotating EU presidency finishes on June 30.
A committee of the European Parliament voted last month to launch a Market Stability Reserve (MSR) to temporarily withdraw some carbon allowances in 2018, addressing oversupply that has suppressed prices. The permits would be reintroduced to the market if demand improves.
However, member states have not yet agreed on the start date. Britain and Germany are pushing for a 2017 start while coal-reliant Poland is calling for a 2021 start.
Zapfel said that while there is disagreement over the start date there is consensus among member states that the reforms are needed and that and agreement will be found to allow the MSR to become law.
He said plans to launch an innovation fund to help industry adapt to low carbon technologies, and funded by the proceeds of the sale of hundreds of millions of permits, could help to unlock the negotiating process.
The EU ETS is central to policy aimed at cutting greenhouse gas emissions by charging for the right to emit carbon dioxide.
An oversupply of permits, exacerbated by weak economic growth across Europe, has hampered efforts to raise carbon prices and thereby spur industries to switch to green energy. Prices for EU allowances (EUAs) have fallen to less than 7 euros ($9) a tonne from 30 euros six years ago.