Eu takes new approach to reform step in co2 trading

This wednesday, the strabburg plenum is expected to say yes after all when it votes in the second attempt on the reform step by eu climate commissioner connie hedegaard. The signs are favorable: some christian democrats have switched from opposing reform to supporting it after finding a compromise with social democrats and liberals.

The reform step is called backloading – an abstract word that is causing a stir. The idea is to postpone the issue of 900 million CO2 pollution rights for years – hence the word backloading. Due to the delayed issue and the shortage of market supply, the price of CO2 is expected to rise, making investments in climate-friendly technology worthwhile again, according to the EU commission’s calculations. Under the emissions trading scheme, europe’s industry must submit rights to emit the greenhouse gas carbon dioxide (CO2) from its 12,000 factories.

Currently, the price is dumping around 4 euros per ton of CO2. The EU commission had once proposed 30 euros. Such a crisp price had practically forced companies to invest in climate-friendly technology. But this steering effect failed to materialize – in the crisis, europe’s industry cut back its production, the price of CO2 rights collapsed. And so energy companies like RWE continued to make good money with climate-damaging coal-fired power plants. Instead of making expensive investments, they would rather buy cheap pollution rights.

European parliament member matthias groote (SPD) wants to end this misery. Groote is seen as a man of the middle ground in the climate protection debate, and both environmentalists and industry representatives have warm words to say about him. The german is the parliament’s rapporteur and thus the central contact on backloading. But his report unexpectedly failed in plenary in april. Instead of starting negotiations with representatives of EU countries, as he had wanted, groote had to do some detention. In the environment committee, he sought a new compromise.

This compromise is now ready for a vote. Paper says EU parliament gives green light to backloading, but weakens it at the same time. The withheld CO2 rights are not to be released in 2019 and 2020, but probably already from 2016 onwards. So the shortage would be weaker than expected. In june, the environment committee voted in favor, paving the way for the second plenary vote. “Emissions trading is alive and well,” said groote with relief.

However, it is not yet certain whether the reform project will pass the strasbourg plenum “alive” or will be given the death knell after all. Veteran opponents of reform get ready for rhetorical attack. The second plenary vote is “idiotic,” the CDU/CSU leader in parliament, herbert reul, scolds in an interview with dpa insight EU. CO2 trading is a market instrument in which politics is not allowed to tamper arbitrarily.

The planned EU climate fund, which according to the parliamentary paper is to be fed by partial revenues from emissions trading, is unrealistic, he says. Finally, finance ministers were no longer able to freely dispose of the revenue from emissions trading. “No member state will go along with that,” says reul.

Reul’s finnish colleague eija-riitta korhola is shaking her head even more. Compromise is impossible on this issue, says reform opponent. “Backloading is like being pregnant – it’s either yes or no. Yes and no is not possible.”

The federal government was allowed to follow the backloading vote closely. After that, black and yellow probably had to show their colors when the council, as the organ of the member states, has to give its approval. Poland, a coal-producing country, steadfastly rejects the plan, france supports it. Germany is still without a position. While environment minister peter altmaier (CDU) is in favor in the interest of climate protection, economics minister philipp rosler (FDP) is against it out of concern for ballast for industry.

Defiant tones can be heard from the ministry, according to which backloading is to be “fought” against. Should mean: even if strasbourg gives the green light, the battle for backloading is not yet lost for opponents of reform.

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