Members of the environment committee in the European Parliament have approved an amendment to the proposed Energy Efficiency Directive that is to see carbon prices go up.
In a bid to create incentives for investment in low-carbon technologies and tackle oversupply, MEPs voted to set aside some €1.4 billion worth of allowances from the EU’s emissions trading system, or ETS, during its third phase of implementation.
The vote took place just as European carbon prices slumped to a historic low of €6.51, a price regarded as too low to encourage investment in low-carbon technology development. The EU’s flagship tool for cutting down on carbon emissions has been eroded because of the financial market shock caused by the sovereign debt crisis in Europe and research groups estimated that there will be surplus of allowances to 2020 ranging from 500 million to 1.4 billion.
“This undermines the effectiveness of the EU ETS and could wipe out billions of urgently needed for low-carbon finance. Withholding allowances from the scheme is therefore essential to restoring confidence in the EU ETS and low-carbon growth up to 2020,” a group of 15 companies and lobby groups said in a joint statement issued last Friday (16 December) asking the European Parliament to back measures to support the ETS. The signatories, which include Dong Energy, Alstom, Shell, Bellona and E3G were pleased with the outcome of the committee’s opinion vote.
“The vote is significant, it is the first step in realising EU’s climate ambitions and I expect more and more people in the EP and member states supporting this, because there is so much money at stake”, Sanjeev Kumar of environmental group E3G told EURACTIV.
Although this sends out a “strong positive message”, it serves just to prepare the ground for the “very tough negotiations” to come. “The vote puts the issue on the agenda of the upcoming [industry] committee, which cannot ignore it,” Kumar said.
Christian-Democrat MEP Peter Liese, rapporteur for the committee, called this a “cautious proposal”. “We approved a careful intervention in the ETS.
The Commission should set a significant number of allowances aside to stabilise the carbon price, but we want the Commission to monitor the development and guarantee that the carbon price will not go up to more than the €30 we expected in 2008,” Liese said, adding that the strategies of many member states which were based on the revenues from ETS could not work anymore.