A new proposal from Latvia, holder of the EU Presidency, puts forward a date of 1 January 2019 to start reforms of the Emissions Trading System (ETS), according to EU sources, as part of efforts to seal a compromise deal.
The latest proposal says a Market Stability Reserve, to hold surplus carbon allowances, should be set up in 2018 and start operating from 1 January 2019, two years earlier than the European Commission’s original proposal.
It also says unallocated allowances should be transferred to the reserve in 2020.
The EU sources, speaking on condition of anonymity, said the date was circulated in a proposal from the Latvian Presidency on Friday.
Officials were unavailable for comment.
The presidency is working to build a compromise position ahead of a meeting of diplomats representing all 28 member states on Wednesday that is meant to prepare the ground for negotiations on a legal text on 5 May.
The sources said Poland, whose economy relies on coal, was still leading a blocking minority that wants a 2021 start date.
At the same time, the European Parliament and some member states, notably Britain and Germany, have backed early reform to incentivise investment in zero carbon energy, including renewables and nuclear power.
The EU ETS is meant to be central to the European Union’s efforts to reduce carbon emissions, but oversupply following recession, has meant the price of permits has stagnated at around €7 a tonne.
Thomson Reuters Point Carbon analysts said the difference between the European Parliament’s position that the MSR should start by the end of 2018 and the 2021 date was equal to the annual emissions of 50 medium-sized coal plants.
The Commission, the EU executive, has said it cannot put forward proposals on deeper structural reform of the ETS, the world’s biggest carbon market, until the smaller MSR reform has been agreed.