MEPs do u-turn over backloading ETS

The European parliament has voted in favour of new proposals to delay the sale of carbon credits under the emissions trading scheme less than three months after rejecting the measure

In April, MEPs controversially refused to back plans by the European Commission to withhold the sale of 900 million allowances until the latter part of the current phase of the emissions trading scheme (ETS), which runs 2013-20.

The fall in industrial output across the EU due to the economic downturn had produced a surplus of ETS credits, which has seen the price of carbon fall to just €3 per tonne – far below that envisaged when designing the scheme to incentivise firms to cut their energy use.

Today (3 July), MEPs voted 344 to 311 in favour of amended proposals from the parliament’s environment committee to “backload” the sale of allowances.

Unlike the commission’s plans, which would have given EU authorities the power to amend the arrangements for selling allowances when necessary, the committee’s proposals limit this power to a single change and only during the phase of the scheme.

And, whereas the commission’s plan would have seen the allowances held back until 2019, MEPs supported a proposal to reintroduce the permits in a “predictable and linear manner” the year after they are withdrawn.

The Liberal Democrat’s European environment spokesperson Chris Davies welcomed MEPs change of heart, but warned that the vote highlighted a lack of “appetite for measures to tackle global warming”.

“What should have been a modest regulatory adjustment has taken on huge importance and divided governments across Europe,” he said. “Europe is at risk of losing its claims to leadership in fighting climate change. The need to develop a low-carbon economy is being given little encouragement.

“We need to urgently work on a more long-term structural reform of the ETS and gain back momentum in the fight against climate change.”

Energy secretary Ed Davey, which had called on MEPs to back the original backloading proposals in April, described the vote as an “an important step forward for climate change policy”.

“We need a stable carbon market so we get a more certainty for investors so emissions reductions can be achieved at the lowest cost possible," he said. “There is still much work ahead, and we must now focus on securing agreement to the proposals in council to facilitate a deal.

“Alongside this, there should be a parallel focus on the urgent need for structural reform of the EU ETS to promote growth in low-carbon industry in the longer term. We are calling on the European commission to bring forward legislative proposals by the end of this year, along with 11 other EU Member States.”

The plans must now gain the support of the EU member states before they can be introduced.