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European politicians yesterday voted to start reforms to bolster prices on the EU’s Emissions Trading Scheme (ETS) by the end of 2018.
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Under the reform the EU plans to take hundreds of millions of surplus carbon allowances out of the market and place them in a so-called Market Stability Reserve (MSR). It would put them back into circulation if demand rises.
The 28-nation EU is seeking to strengthen its emissions trading system after the price of permits plunged about 75 per cent since 2008 to levels that fail to deter industry from burning coal.
“Our most important instrument to fight climate change seems to be back on track,” Gerben-Jan Gerbrandy, lead lawmaker on the draft measure for the Liberal group, said after the vote.
The draft law’s amendments would bolster the market fix by transferring to a reserve 900 million permits withheld, or backloaded, from government auctions in 2014-16. Unused allowances set aside for new entrants by the end of the current trading period through 2020, as well as permits not allocated to emitters due to closures, would also be moved to the reserve.
Benchmark carbon prices fell by 1.2 per cent to €7.67 per tonne on the announcement of the vote.