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Carbon prices hit all-time low after MEPs reject EU ETS reform
- 11 years ago (2013-04-17)
- Junior Isles
MEPs have narrowly rejected plans to prop up carbon prices in the EU's emissions trading scheme (ETS) by 'backloading' the sale of 900 million carbon allowances.
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Proponents of the backloading plan have criticised the failure, saying it badly dents the EU’s green credentials and undermines its claim to global leadership in the fight against climate change.
Analysts predict carbon prices will hit record lows in the coming days as the chronic oversupply of carbon allowances looks set to continue. The price of EU allowances (EUAs) fell from more than €4.50 a tonne to a new record low of €2.63 a tonne in the immediate aftermath of the vote.
Centre-right MEPs opposed the plans as the represented interference with the market-based ETS mechanism and could lead to higher industry costs and energy bills in some markets. They were supported by climate sceptic MEPs who are resistant to any steps to try and tackle climate change.
Energy and climate ministers from Germany, France, Italy, the UK, Sweden and Denmark have warned that rejecting the plan would potentially lead to individual member states abandoning joint action, instead pursuing their own carbon taxes or carbon floor prices.
The vote has left the door open for earlier action to support the carbon market. "The Commission of course regrets that the European Parliament has not approved the backloading proposal," said EU Climate Commissioner Connie Hedegaard in a statement. "However, it is worth noting that when it was suggested in the second vote that the Parliament finalised its rejection right away, this was not supported.
"The proposal will now go back to the Parliament's Environment Committee for further consideration. Europe needs a robust carbon market to meet our climate targets and spur innovation. The Commission remains convinced that backloading would help restore confidence in the EU ETS in the short term until we decide on more structural measures.”