MEPs voted on Tuesday 16 April against freezing auctions of a portion of CO2 emission quotas, so as to boost the price of EU "polluter's permits". A majority felt that interfering with the supply of credits would undermine confidence in the Emissions Trading System (ETS), designed to cut greenhouse gas emissions. In a separate vote, MEPs agreed to temporarily exclude intercontinental flights from the scheme.
The proposal to freeze credits, dubbed "backloading", was rejected by a narrow margin, with 334 MEPs voting in favour of an amendment rejecting the proposal, 315 voting against it and 63 abstaining. The proposal will now be referred back to the EP's environment committee.
MEPs opposing the measure advocate deeper reform of the ETS and fear that interfering with the supply of credits could undermine players' confidence in the scheme. Some also believe that a rise in the carbon price would erode the competitiveness of European industry and lead to higher household energy bills.
On the other hand supporters of the measure argued that an oversupply of credits must be corrected to make the system function as intended. They say a higher carbon price would catalyse the EU's transition to a green economy by stimulating investment and innovation and could also help to connect the EU carbon market with those of other regions.
"I deeply regret today's vote. It is the beginning of the repatriation of climate policy," said Matthias Groote, a German member of the S&D group who is in charge of steering the proposal through Parliament. "This kind of politics plays into the hands of climate sceptics. The rejection of the backloading proposal weakens the EU emissions trading system and puts our climate goals at risk," he added.
ETS exemption for intercontinental flights
A separate draft law, prepared by Peter Liese, a German member of the EPP group, was adopted by 577 votes to 114, with 21 abstentions. It includes an agreement with the Council to temporarily suspend the ETS for intercontinental flights, so as to facilitate progress towards a global agreement within the International Civil Aviation Organisation (ICAO).
"Aviation emissions have more or less doubled since 1990. They are increasing constantly," Mr Liese said. "Objections from non-EU countries to being included in the ETS are not founded. We only stop the clock because we want to achieve a framework for a worldwide convention within the ICAO. We are not prepared to keep this derogation for more than one year." He called on the EU to challenge US secretary of state John Kerry during the negotiations, adding: "After the Kerry-Lieberman bill, if the US doesn't make an effort towards an agreement in ICAO, Mr Kerry will lose credibility."
The ETS, a carbon market created in 2005, set an overall emissions ceiling which is gradually being reduced over the long term. By 2020, emissions from industry sectors covered by the ETS will be 21% lower than in 2005.
Below this ceiling, companies receive or buy credits auctioned by member states. One credit corresponds to one tonne of CO2 emissions. Companies may also sell unused credits. Limiting the supply of credits ensures that they have value, so the scheme rewards companies that invest to limit emissions.