Lawmakers push structural measures to prop up carbon price

EXCLUSIVE / Five weeks after voting down the ‘backloading’ (or withholding) of allowances to raise carbon prices, the European Parliament’s industry committee is proposing two far-more ambitious structural measures. 

MEPs will vote in plenary next week on a non-binding but surprisingly hard-hitting report on the EU’s Energy Roadmap 2050, which calls for the EU to limit the amount of carbon allowances in the EU’s Emissions Trading System, and to consider implementing a carbon price floor.

“We really have to make a statement and we’re doing it again,” said Judith Merkies, a committee member. “Even though CO₂ prices might be very low, we still have to go towards zero emissions.”

The report proposes new legislation to start taking carbon allowances off the market by steepening the 1.74% annual decline in numbers allocated to member states until it is in line with the EU’s 2020 decarbonisation goal.

The 1.74% decline would anyway only achieve a 70% reduction in emissions by 2050, according to the Commission, rather than the 80-95% outlined in the EU’s low carbon roadmap.

If this trajectory is revised early, the Commission’s structural carbon market study recommends ratcheting up the 2020 greenhouse gas emissions target from 20% to 30%.

Jesse Scott, the head of environment at the European electricity association Eurelectric, hailed the parliamentarians' report as “exactly the right idea at the right time and place”. 

“The linear factor is Eurelectric’s priority,” Scott said. “It is very heartening.”

The electricity association favours a trajectory of 2.3% for the security it would send investors about the EU’s commitment to the 2050 decarbonisation target.

But the parliamentary report goes further, calling for the Commission to publish “an assessment of the value of establishing a reserve price for the auction of allowances,” beyond which the Commission would take action to firm up carbon values.

Britain already has a ‘carbon price floor’ of this nature, but other mechanisms could also be devised to automatically adjust the supply of allowances to compensate for price fluctuations and demand-supply imbalances.

Odd positioning

Oddly, a much milder motion on backloading was defeated by the same parliamentary committee just weeks ago. The report that will come before Parliament next week was actually approved by the industry committee shortly before that.

MEP Britta Thomsen, a Danish Socialist who also sits on the industry committee, told EURACTIV that the firming up of climate positions by EU states was affecting the Parliament's positioning.

“It is now important and crucial that the European Parliament takes a strong position and sends a clear signal to the EU institutions,” she said.

The original industry committee vote rejected two amendments, one from the Socialists and Democrats and another from the centre-right European People's Party, calling for three climate targets, or, alternatively, just one.

But the compromise report still calls for binding targets for greenhouse gas emissions reductions and renewables. “We want a new directive on 2030 targets for energy from the Commission as soon as possible,” Thomsen said.

An opinion added to the report by the environment committee goes some way towards addressing this, with a call on the Commission to set “clear, ambitious and binding targets for emissions reductions, efficiency and renewable energy for 2030, to be based on a ‘high-efficiency and renewables’ scenario.”

Five scenarios

These were two of the five scenarios outlined in the EU Energy Roadmap 2050 in December 2011.

The ‘high energy efficiency scenario’ involved strict energy savings, particularly in the building sector, leading to a cut in energy demand of 41% by 2050 compared to 2005 levels.   

The high renewable energy sources scenario envisaged strong support for renewables leading to a 75% uptake in Europe’s energy mix by mid-century.

“We welcome the ITRE committee identifying renewables as a ‘no regrets’ option to be taken into account in the 2030 policy framework, and its recognition that renewables targets have been successful and should be prolonged,” said Lucie Tesnière, a senior policy advisor for the European Renewables Energy Council.

The report’s two calls for an end to retroactive changes to renewable support schemes were also highly important, she added.

However, the environment committee’s opinion will not be voted on, and the significance of the Energy Roadmap 2050 vote will mostly be as an expression of Parliament’s will.

“This report is a signal to the Commission and member states to get moving,” Merkies said.

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