28 February 2012 (Commodities Now)
A senior parliamentary committee of MEPs on Tuesday agreed controversial measures to let the EU Commission cut supply of carbon permits in the bloc’s Emissions Trading Scheme in a bid to prop up CO2 prices lingering below 10 euros. The industry committee of the EU Parliament passed an amendment to the Energy Efficiency Directive to allow the EC take measures by the end of the year that “may include withholding of the necessary amount of allowances” from the 2013-2020 phase of the EU carbon market.
Before becoming law the bill still needs approval from the full Parliament and the Council of 27 environment ministers.
“Today’s vote provides a strong mandate for the Parliament in its negotiations with the Council on the final legislation,” said Claude Turmes, the Green MEP who steered the bill through the industry committee, in a statement.
Turmes said the committee agreed text beefs up the bill that is designed to ensure the bloc meets a 2020 target to cut primary energy consumption 20 percent.
The bill seeks to impose binding measures on governments to renovate public buildings and force power companies to cut final energy use 1.5 percent a year.
Just one of the 18 compromise amendments was rejected by the committee, giving the parliament a more unified voice that some observers reckon will strengthen its negotiating hand with member states.
The MEPs gave the green light to back a fast-track plan for parliamentary envoys to begin talks with EU governments before a full vote in parliament, increasing the chances that a bill can be made law in the first half of the year.
Denmark, a proponent of strong efficiency measures and chair of discussions between member states, has pledged to complete the bill before its term as holder of the rotating EU presidency expires in July.
But while the bill is slated to be passed before July, it is unclear whether the so-called set-aside provision will survive. Member states are divided on whether to impose extra carbon costs on their industries amid tepid economic growth.
The European Commission is also split on whether to impose a set-aside, despite Climate Commissioner Connie Hedegaard being in favour.
Antonio Tajani, who heads the Commission’s Industry department, on Tuesday cautioned against intervening in the cap-and-trade scheme.
“In the middle of a crisis one cannot demand impossible things from the industry,” said Tajani at a briefing to journalists before the parliamentary committee vote.
“The pricing of allowances should be left to the market. The prices would recover by themselves as soon as the economy would pick up.”