Barroso urged to take a stand on EU carbon market fix

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EXCLUSIVE / The chair of the European parliament’s environment committee has called on EU Commission president José Manuel Barroso to make a public statement of support for the EU’s bloodied plan to reform the carbon market, in a hard-hitting interview with EURACTIV.

The Commission, like Europe’s states, Parliament, and industry, is known to be divided on what, if any, measures should be taken to save the depressed Emissions Trading System (ETS), which is the cornerstone of EU climate policy.

A plenary vote in Strasbourg last week rejected EU plans to ‘backload’ – or withhold – 900 million carbon allowances from auction to boost their price, which tumbled to below €3 a tonne in the aftermath.

But Matthias Groote, a German Socialist MEP (S&D) and Parliament's rapporteur on the EU's backloading legislation, said that Barroso now might have the power to tip the scales in favour of reform.

“It could be a good sign in the direction of the EU Council if Mr Barroso makes a clear statement that the whole Commission supports backloading and also structural reform of the Emissions Trading System (ETS),” he said.

“I expected an announcement two months ago but he didn’t make it. This is the problem.”

“If there is a risk that the whole instrument will fail,” he continued, “then Barroso has to be very clear about what his task is. The Commission is not only the body that drafts reports and legislation. It is also responsible for saving these things.”

According to Groote, the EU president's environmental policy statements weakened in his second presidential term, and he has failed to mention carbon market reform in any recent speeches.   

“It is very useful to have support from the captain because, sometimes if you are silent there is more and more room for rumour and interpretation,” he said.

Barroso’s office moved quickly to distance itself from any suggestion that his enthusiasm for the ETS had waned.

“Our Commissioner for Climate Action defended the Commission’s position which the President was, of course, fully behind,” said spokeswoman Pia Ahrenkilde Hansen. “This is our normal way to operate.”

More generally within the European Commission, officials say that they have done everything that was asked of them and that the debate should now move on to 2030 climate targets, which have the greatest potential to deliver CO2 emissions cuts. 

Shovel the monkey

A suggestion from Groote that “there was no real support for [Connie Hedegaard] from other colleagues” among the EU cabinets was questioned by one Commission source.

"It is no secret that there were internal disputes in the Commission over this, but the vote wasn't lost because of Barroso or other Commissioners,” said the source, who requested anonymity. “It was lost because industry lobbying got involved in the debate and Groote didn’t deliver the European parliament.”

The backloading issue had become a “proxy” for several other battles over EU climate policy, he said.

“Don’t underestimate the extent to which everyone is now trying to shovel the monkey back to everyone else,” the official went on. “It’s a blame game. The reality is that it is now up to the EU Council of Ministers and Parliament to take this forward."

The central position of EU Ministers in giving the parliament a steer is accepted across the board. Intense diplomatic efforts to agree a common position are ongoing and sources say that some states are moving towards the EU's backloading position.

But any breakthrough will still need to be choreographed.

‘New first reading’ on the way

According to Groote, parliamentary coordinators yesterday (25 April) began working on a way to bring “a new first reading” of the legislation back to a plenary session, but it was too early to divulge details.  

“We still have to check with the Parliament’s services what is possible and what is not, what the rules are, and we have to announce it to the plenary as a committee,” he said.

A new amendment – possibly a fall-back compromise previously agreed by Groote – must be returned to Parliament by the end of June, but sources say that the EPP group may try to delay any vote until later in the summer.

Groote said that the new amendment would be a changed text from the one-line rejected last week.

“I hope in the second round it will be better because at the end of the day it is the reputation of the whole parliament that is in danger,” he said. 

Spanish MEPs

Behind the scenes, efforts to repair the fractured ETS alliance in the European Parliament continue.

Groote was effusive in his praise for the Climate Commissioner, Connie Hedegaard, who he said had “tried everything” – and is thought to have swung up to 70 votes from MEPs affiliated to the centre-right European Peoples Party (EPP), the largest in Parliament.

Commissioner Hedegaard travelled to Spain last week to talk to Spanish S&D MEPs about their failure to vote for the proposal. The MEPs claim that their abstentions were an accident, although observers dispute this.

“When they announce it’s an accident its an accident,” Groote said. “Sometimes it is necessary to push the right button.”

The wider problem, he argued, was that the normal procedure of building an atmosphere of compromise had not been possible despite several meetings with MEPs from other political groups who were acting as 'shadow rapporteurs' on the backloading file.

In a sign of how poisonous the debate had become, one controversial Finish member of the environment committee, Eija-Riitta Korhola (EPP) reportedly retweeted a message that read: “Insistence of DG Climate and [Hedegaard] to enforce back-loading against EP vote reminds [me of] the worst communist practices.”

Groote described this as “a real provocation.”

In her blogs, Korola has questioned climate change as an unproven theory and described EU climate policy as “catastrophic”, and coming with “a massive price tag attached to it.”

With a turnover that reached around €90 billion in 2010, the EU's Emissions Trading System is the world's largest carbon market. Around 80% of it is traded in futures markets and 20% in spot markets.

The ETS aims to encourage companies to invest in low-polluting technologies by allocating or selling them allowances to cover their annual emissions. The most efficient companies can then sell unused allowances or bank them.

The scheme has proved influential. Australia’s is due to begin carbon trading in 2015,  Thailand and Vietnam have both unveiled plans to launch ETS’s, China is due to launch pilot schemes across several provinces this year, and India will ring the bell for trading on an energy efficiency market in 2014. Mexico and Taiwan are also planning to introduce carbon markets.

  • June 2013: Council of EU Environment Ministers
  • End of June 2013: New backloading amendment to be returned to the European Parliament
  • 2014: India due to begin energy efficiency trading
  • October 2014: Thailand due to launch a voluntary emissions market
  • 2015: South Korea due to begin emissions trading
  • 2018: EU and Australia due to link emissions trading schemes

European Commission

Market analysis

  • Bloomberg New Energy Finance: BNEF
  • Thomson Reuters: Point Carbon
  • International Emissions Trading Association: IETA

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