EU lawmakers back plan to fix ailing carbon market
Aim is to boost carbon price, which has dropped due to oversupply of allowances and Europe's economic slowdown.
STOCKHOLM, Sweden—The European Parliament on Wednesday backed a rescue plan for the world’s biggest cap-and-trade system for emissions of carbon dioxide, the most prevalent greenhouse gas from human activities.
In a 344-311 vote, European lawmakers in Strasbourg, France, approved a proposal to delay an auction of allowances in the EU’s emissions trading scheme.
The delay is designed to boost the carbon price, which has dropped below 5 euros (US$6.5) per ton due to an oversupply of allowances and Europe’s economic slowdown.
Introduced in 2005 as a tool against climate change, the system allows power plants and big factories to trade CO2 permits, providing an incentive to cut emissions.
The plan is an amended version of a proposal rejected by the European Parliament in April. It must also be approved by EU governments.
“We must have a well-functioning European carbon market to boost innovative low-carbon technologies in Europe,” Climate Commissioner Connie Hedegaard said in a statement, welcoming the parliament’s vote.
France’s governing Socialist Party hailed the decision as a “second chance for the carbon market” and a victory against lobbies.
The cap-and-trade system is a cornerstone of the EU’s climate policy so its executive Commission is eager to make it work. But some energy-intensive industry groups had lobbied against delaying, or “backloading,” allowances, saying such measures would create market uncertainty.
“They signal willingness to intervene in the market and push up prices, risking weakening competitiveness and distracting investment from innovation,” said Hubert Mandery, who heads the European Chemical Industry Council.
The 27-nation EU aims to get 20 per cent of its energy from renewable sources including wind, solar and hydropower by 2020.