Carbon fix returns to EU agenda as Lithuanian presidency seeks mandate

European Union governments will discuss an emergency measure to help boost carbon prices this week as Lithuania seeks to advance talks on the draft plan, according to two EU officials with knowledge of the matter.

Lithuania, which holds the EU rotating presidency, plans to push for a mandate to start talks on the proposal with the European Parliament at a meeting of ambassadors from member states on Wednesday, according to the officials, who asked not to be identified, citing policy. The Parliament approved an amended version of the measure known as backloading in July after carbon prices slumped to a record low in April.

The emergency fix, which would temporarily alleviate oversupply in the European emissions trading system by delaying auctions of some permits, needs both approval by the Parliament and qualified majority support from member states to be enacted. Out of the EU’s 28 nations, three oppose it and four, Germany, Spain, Portugal and the Czech Republic, remain undecided, according to the officials.

“A vote on a mandate to negotiate with the European Parliament is unlikely ahead of the German elections,” said Itamar Orlandi, analyst at Bloomberg New Energy Finance in London. “Formal as well as political support for the measure is unlikely to be robust without Berlin.”

In Germany, Economy Minister Philipp Roesler opposes backloading while Environment Minister Peter Altmaier advocates a move to help prices rebound. Chancellor Angela Merkel said in May she hoped that Europe’s biggest economy would be able to tackle the plan soon after elections on Sept. 22.

EU emission permits for delivery in December rose 0.2 percent to 5.34 euros ($7.08) a metric ton on the ICE Futures Europe exchange as of 4:25 p.m. in London.

The backloading debate will remain the main driver for EU emission permits after Poland announced it would start auctioning permits from Sept. 16, Orlandi said. “Traders will particularly look for clues on how quickly Germany will decide on its formal position.”

The current price of carbon is a fraction of the 36.40 euros in July 2008, before an economic recession and debt crisis hurt industrial output, cutting into demand for pollution rights and helping inflate the glut of permits to record 2 billion tons last year. The cost of pollution is too low to encourage investment in clean technologies that Europe needs to shift to low-carbon economy, according to the European Commission.

To temporarily boost prices the commission, the EU regulatory arm, proposed last year to postpone auctions of 900 million allowances from 2013-2015 to 2019-2020. The proposal has divided member states and industry, with Poland, Greece and Cyprus objecting to the planned market intervention.


Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.