Negotiators discussing a law to boost prices in the European Union’s carbon market made progress in talks, increasing the possibility of a compromise deal to accelerate the proposed fix, according to key lawmakers. Representatives of political groups in the European Parliament’s environment committee held discussions on the proposal to introduce a stability reserve in the EU’s emissions trading system. Ivo Belet, the lawmaker leading the draft measure, plans to propose a plan today to build a cross-party alliance before the vote on February 24.
Belet’s proposal aims to bridge the differences between political groups regarding the design of the reserve. The original proposal suggests that the reserve would absorb allowances if the surplus exceeds a fixed limit and release them to the market in the event of a shortage starting in 2021. The European People’s Party (EPP), the largest group in the EU Parliament, has indicated its willingness to agree to an earlier start in 2019, while the Socialists, Liberals, and Greens have called for an introduction in 2017.
Matthias Groote, a German lawmaker representing the Socialists, expressed optimism about a broad compromise, stating that they are ready to support 2018 as the starting date and urging the EPP to make a move. The EU is aiming to strengthen its emissions program after the price of permits declined significantly, failing to discourage industries from using coal, the most polluting fossil fuel.
Bas Eickhout, a member of the European Parliament representing the Greens, noted progress in the talks. Gerben-Jan Gerbrandy, representing the Liberals, emphasized the importance of an early start for the stability reserve and called for compromise from the EPP.
The EPP tentatively supported 2019 as the starting date for the reserve and proposed addressing the future of backloaded carbon permits delayed at government auctions. Preventing the return of backloaded allowances to the market is a priority for the Socialists and Liberals, who also want the transfer of unallocated permits to the reserve to strengthen the fix.
The environment committee is scheduled to vote on the market stability reserve during its February 24 meeting. If compromise amendments backed by most political groups are adopted, Belet can request the committee’s mandate to start negotiations with EU governments to finalize the fix. The outcome of these negotiations will require approval from national governments and the entire Parliament for the law to come into force.
There is optimism that a compromise will be reached, with participants in the talks showing a sense of responsibility and a willingness to achieve a positive result.
