ENVI vote on post-2020 EU ETS reform postponed

09 December 2016 | Trading

A vote by the European Parliament's environment committee (ENVI) on a legislative proposal that will establish a post-2020 framework for the EU emissions trading scheme (EU ETS) has been delayed by a week.

Member of parliament (MEP) Ian Duncan, who is responsible for steering the legislation through the chamber, tweeted that — "in light of positive developments" — the vote has been delayed to 15 December. "Ground is shifting. We are moving forward," Duncan said.

Duncan has been seeking to forge a compromise between political parties after their head negotiators or shadow rapporteurs failed to reach consensus at a meeting on 30 November.

Parliament's two largest parties — the European People's Party (EPP) and the Socialists and Democrats (S&D) — have been at loggerheads over the proposal, which will establish the rules for phase 4 (2021-20) of the EU ETS.

Duncan's latest proposal suggests that 750mn EU ETS allowances to be placed in the market stability reserve (MSR) should be cancelled in 2019 and that the MSR's allowance removal rate should be temporarily doubled in the early years of its operation.

But the S&D wants more ambitious reform. It is pushing for a higher 2.4pc/yr linear reduction factor in the EU ETS allowance cap, as opposed to the 2.2pc tabled by Duncan.

In contrast, the EPP strongly backs Duncan's amended paper, which is closely modelled on a proposal adopted by the parliament's energy and industry committee last month. It proposes a binary approach to free allowance allocation, as well as a 5pc rise in free permits and a corresponding cut in auctioned allowances to prevent triggering the cross-sectoral correction factor.

Under the existing binary approach, firms receive either all or 30pc of their allowances for free up to 2030, depending on their degree of carbon leakage exposure. A proposal for a multi-tiered approach — with more industry categories eligible for varying shares of free allowances — has also been put forward. The cross-sectoral correction factor cuts free allowances distributed across all installations equally, if the total to be handed out for free exceeds the number permitted by the ratio to the overall EU ETS cap.

Source: www.argusmedia.com