The European Parliament's Environment Committee has given its support to a compromise plan to boost the price of allowances on the EU's carbon market.
To become law, the proposal to temporarily remove some of the glut of permits that has weighed on prices still needs to win backing from a plenary session of the parliament next month in Strasbourg, and from EU member states.
Traders said the market had already priced in a positive vote and allowances on the EU Emissions Trading System (ETS) fell by 3.6% to €4.53 a tonne short after the vote on Wednesday (19 June).
After a defeat of the proposal in a full session of the European Parliament in April, the carbon price fell to a record low of less than €3 a tonne.
British MEP Chris Davies, spokesman for the Alliance of Liberals and Democrats for Europe on the committee, indicated that the deal was far from perfect.
In a statement after the vote, he said the plan “amounts to little more than a modest regulatory adjustment. It will maintain the operation of carbon trading but it will not provide a driving force to promote long-term low-carbon investments."
"We still need to agree on clear targets for Europe's CO2 reductions by 2030 to give investors greater certainty”, Davies said, “and we urgently need to secure a global agreement on measures to tackle climate change."
Green groups welcome deal
Campaigners welcomed the yes vote, although environmentalists say the proposal is very weak and will have a limited impact on prices.
But they hope it will be a stepping stone towards deeper structural measures, such as the permanent withdrawal of some carbon permits.
"With this vote the Environment Committee has sent an important political signal: there is still commitment to the EU's flagship climate policy," said Rob Elsworth of the campaign group Sandbag.
The carbon market plan was meant to be a quick fix for a market that has hit a series of record lows far below levels of €40 to €50 needed to drive a shift to lower carbon energy.
The proposal has met fierce resistance from heavy industry, which complains about anything that drives up the cost of energy in difficult economic times, and from Poland, whose economy depends on coal.
Germany has failed to take a stand ahead of elections in September.
Carbon prices have reacted to the twists and turns of the debate, which has dragged on for years. Price swings, often in excess of 10%, have been exaggerated by the weakness of the market.