Backloading's back

07 May 2013

Support for the ailing European carbon market has continued with a joint letter from nine EU member states urging another attempt to put through 'backloading' measures as well as structural reform by the middle of this year.

Today's statement said the nations were "firmly committed to the EU Emissions Trading System (ETS) as being at the heart of the EU's climate change and low-carbon investment policies up to and well beyond 2020." From the EU's 27-nation membership it was signed by relevant ministers from Denmark, Finland, France, Germany, Portugal, Slovenia, Sweden the Netherlands and the UK.

The ETS is designed around a capped market for the trade of CO2 emission allowances, which provides a path for a 21% emissions reduction between 2005 and 2020. The problem is that current economic conditions have seen a surfeit of emissions allowances build up and prices on the market drop as low as €3 for an allowance to emit one tonne of carbon dioxide. "As currently designed," the countries state, the ETS "cannot provide the price signals needed to stimulate the low-carbon investment needed." The UK has already acted by bringing in a 'carbon floor price' of £16 (€19) per tonne which is levied on domestic emitters.

This is the idea of witholding some 900 million allowances from the current ETS trading period for release in a later one, thereby tightening immediate supply and raising prices in the short- and medium-term. In mid-April a backloading proposal was voted down by the parliament in a development the statement today described as "disappointing."

They dislike market intervention, but the nine countries said action is justified because "a one-off and targeted intervention now would minimise market uncertainty and distortions, and also promote investment in low-carbon technologies." Essentially this pushes for national interests represented in the parliament to negotiate and put forward a workable proposal on 'backloading'. The statement also presses the European Commission executive to develop plans for reform of the ETS to maintain its usefulness in the long term.

"We therefore call on both the Council and Parliament to take the urgent steps necessary, working constructively together, to come to a swift resolution of the backloading proposal by July of this year at the latest," said the statement.

Common, uncommon policies

All EU countries share common targets to increase energy efficiency by 20%, reduce carbon dioxide emissions by 20% and reach a 20% energy contribution from renewables - all by 2020. A discussion is underway on new set of European energy targets for 2030 and specifically whether these should include a specific target for renewables or not. In mid-March 12 EU countries made the case for technology neutrality in targets: Bulgaria, Finland, France, Hungary, Liuthuania, Poland, Romania, Slovakia, Spain, the Czech Republic, the Netherlands and the UK.

Researched and written
by World Nuclear News