EU Parliament rejects changes to Emissions Trading System

Source:European Commission



Members of the European Parliament (MEPs) voted on Tuesday 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.

The proposal to freeze credits, dubbed "backloading", was rejected by a narrow margin, with 334 MEPs voting in favor of an amendment rejecting the proposal, 315 voting against it and 63 abstaining. The proposal will now be referred back to the EP 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 be passed on in 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 catalyze 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 EP rapporteur Matthias Groote (S&D, DE). "This kind of politics plays into the hands of climate skeptics. The rejection of the backloading proposal weakens the EU emissions trading system and puts our climate goals at risk," he added.


Background

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

Beneath this ceiling, companies receive or buy credits auctioned by member states. One credit corresponds to one metric ton of CO2 emissions. Companies may also sell on unused credits. Limiting the supply of credits ensures that they have value, so the scheme rewards companies that invest to limit emissions.

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