Brussels bids to rescue carbon-trading scheme
BRUSSELS - (AFP) - The European Commission moved to fix the EU's sickly Emissions Trading Scheme on Wednesday, a centre-piece of EU climate policy now in trouble, as certificates fail to find buyers in times of recession.
"Is it wise to continue to flood an already oversupplied market? Clearly not," said Europe's energy commissioner Connie Hedegaard on Twitter. "That's why (we) propose to change the auction time profile."
Brussels proposes a delay or freeze in auctions of the certificates from 2013 to 2020 to prop up sagging prices.
The ETS scheme was set up in 2003 to discourage polluters and simultaneously raise funds to invest in clean and low-carbon energy, the certificates being held by industries who may trade them if unused.
But the system is in trouble thanks to oversupply of carbon allowances to industries which have slowed down in recessionary times.
Prices Wednesday were at seven euros ($8.50) a tonne in comparison to the 24 to 30 euros needed to invest in renewables.
As the scheme widens and goes into its third trading period in 2013, some 8.5 billion tonnes of carbon allowances are to be put up for auction between then and 2020.
Hedegaard sees three options, from a small freeze of 400 million tonnes to a medium freeze of 900 million or a more significant intervention affecting 1.4 billion tonnes.
The European Parliament, which is involved in the decision-making, favours the steepest option, which would bring the price up to 14 or 15 euros.
Hedegaard said the change in the timing for auctions was "a short term measure" to improve the functioning of the market.
"If the political will is there all the necessary decisions can be taken before the next auctioning phase starts at the beginning of 2013."
But some industrial lobbies, backed by supporters inside the commission, are opposed to any move to prop up prices. The proposals "are not a good solution", said the European Association of Metals, Eurometaux.
Some commissioners also are opposed to any intervention by the EU executive on a market, despite the fact it was set up by the EU.
Under the ETS system, member states each year allocate two billion tonnes of carbon emissions, or around half of the CO2 emissions produced across the 27-nation bloc, in sectors such as steel, chemicals and energy.
Eleven thousand companies in the 27 EU states and three others buy some of the certificates, the remainder currently being handed out free of charge and traded if unused.
But from 2013 none of the certificates will be free as the EU sticks to a pledge to bring emissions from industrial installations down to 21 percent of their 2005 levels.