Environment Committee reaffirms support for emissions trading fix  

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A freeze on the auctioning of some CO2 permits to help boost investment was approved for a second time by Environment Committee MEPs on Wednesday after the full House narrowly rejected the measure in April. The committee proposes stricter conditions and advocates an earlier, predictable reintroduction of credits. MEPs also propose earmarking a portion of permit auction revenues for innovation.

The growing surplus of emission allowances – due to initial oversupply and the economic slowdown – has made the carbon price fall well below the levels estimated when the EU Emissions Trading System (ETS) was created. MEPs in the lead Environment Committee reiterated their support for allowing the Commission to “backload” – or delay - the timing of a portion of credits to be auctioned.

"We now have broader support for a solution that will allow the ETS to fulfil its purpose and support innovation to tackle climate change. I believe the full Parliament will endorse our proposals and let us start negotiations with EU ministers as soon as possible. As I have always said, backloading is a quick, temporary fix. Structural reform of our Emissions Trading System will follow to ensure it remains the cornerstone of EU's climate policy and an inspiration to others around the world", said EP rapporteur Matthias Groote (S&D, DE) who is steering the legislation through Parliament.

Avoid companies relocating outside the EU

In an approved consolidated amendment tabled by the EPP, S&D and ALDE groups, MEPs say the Commission "may, in exceptional circumstances" adapt the timing of auctions, provided an impact assessment shows the sectors concerned will not face "significant risk" of companies relocating outside the EU. "The Commission shall make no more than one such adaptation and only in the third phase of ETS 2013-2020", the text adds.

Credits withheld should be reintroduced "in a predictable and linear manner starting from the year following that during which allowances have last been withheld" the text says. The original draft from the Commission proposed returning them in 2019-2020.

Earmarking auction revenues to fund low-carbon technologies

MEPs capped the number of credits to be frozen at a maximum of 900 million. Of these, 600 million must be made available to set up a fund to support the development of innovative low-carbon technologies, demonstration projects and measures intended to reduce the costs and carbon emissions of energy-intensive industries, as well as for the "social and skill-related aspects of the low-carbon transition", the text says.

Next steps

The text is to be put to a plenary vote on July 3 in Strasbourg.

In the Chair: Matthias Groote (S&D, DE)