In April 2012 the European Commission announced a “two-step” plan for strengthening the EU Emissions Trading Scheme (ETS): first, a “back-loading” of EUA auctions, and second, “structural measures”.
On 16 April MEPs voted against opening negotiations on the back-loading with the Council. Instead, they sent the proposal back to the Parliament’s Environment Committee to be re-considered. These were narrow votes, with tiny majorities – and the result is on-going uncertainty. The rapporteur, MEP Matthias Groote (S&D, Germany), now has two months to table a new back-loading report to the Committee. This could likely be voted in June and go to the Parliament plenary in September (all dates to be confirmed).
Meanwhile, the Irish Presidency of the Council has announced that Member States “will continue working to agree their position” – aiming for mid-May – and ETS reform is on the agenda for the 18 June Environment Council meeting.
While it is hard to judge exactly how either the Parliament or the Council will now vote, it is clear that the negative vote and the plunging EUA price shocked many EU decision-makers, so that previous opponents of ETS reform are now talking about compromise.
The most interesting news concerns structural measures. At a stakeholder meeting on 19 April, the Commission Director-General for Climate, Jos Delbeke, told participants, that he sees good support for both an early revision of the ETS annual linear reduction factor to align the ETS cap with the EU 2050 goal, and for a one-off “retirement” (cancellation) of EUAs in trading period 3, to resolve the short-term over-supply crisis. Delbeke also said that DGs Climate and Enterprise are starting work on the 2014 review of the ETS carbon leakage provisions, because free allocations based on a 2008 projection for a €30 EUA price are not compatible with a €3 price. He said that either the ETS must be strengthened or the leakage provisions must be adjusted.
