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Six EU climate ministers, including Germany's, support backloading of ETS allowances

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Published 12 April 2013, updated 15 April 2013

Climate and environment ministers from Germany and five other European Union states have reportedly urged EU lawmakers to approve proposals for backloading emissions trading allowances, in order to prop up carbon prices and sustain “a central instrument of EU-wide climate protection”.

“We the undersigned support the proposals for backloading a certain amount of allowances,” the climate and environment ministers of Germany, France, Italy, United Kingdom, Sweden and Denmark wrote in a letter, according to the Reuters news agency.

Next Tuesday (16 April), the European parliament will consider the proposals in a make-or-break vote. Carbon prices plunged to record lows earlier this year.

However, German officials appeared on Friday to distance themselves from the letter, which was signed by Peter Altmaier, the environment minister.

"We continue to oppose intervention in the market mechanism for trading permits," a spokeswoman for Economy Minister Philipp Rösler told Reuters.

The European Commission tabled the backloading proposal in July, suggesting to raise flat-lining carbon prices by withholding 900 million allowances from auction, so creating a market scarcity.

“The EU ETS has a growing surplus of allowances built up over the last few years,” Climate Action Commissioner Connie Hedegaard said in a statement announcing the carbon market fix. “It is not wise to deliberately continue to flood a market that is already oversupplied.”

>> Read: Brussels rolls out carbon market fix

But energy-intensive industries have balked at the move, saying the ETS is working as intended and that low carbon prices are normal at times of economic slump.

Eurofer, the European steel association, said carbon prices will go up again once European industry has returned to growth, stressing that European industry has been struggling with recession for almost four years.

Increasing carbon prices - and therefore energy costs for industry - will not help European industries compete on the global stage, it argues.

"The EU itself has published calculations saying that for large energy users like the steel industry each Euro increase in carbon prices will result in an additional €190 million in energy cost. Competitors outside Europe do not have to bear such cost," Eurofer said in an opinion article published on EurActiv.

Gordon Moffat, Director General of Eurofer, played down the significance of the backloading vote, telling EurActiv in a January interview that the economic downturn cost the steel industry "significantly more than the backloading".

"But this just comes on top," he said adding: "Backloading I think is a disgrace."

Next steps: 
  • 16 April: European parliament environment committee to vote on backloading proposal
EurActiv.com with Reuters

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