EU to clamp down on 'glut' of carbon permits in the ETS

EU lawmakers have agreed to fastrack a reform to the EU emissions trading scheme (ETS), to deal with the surplus of allowances in the system.

Approximately two billion backloaded and unallocated allowances will be put into the MSR before they flood the market at the end of the decade.

Approximately two billion backloaded and unallocated allowances will be put into the MSR before they flood the market at the end of the decade.

Representatives from the European parliament and the European commission decided to establish a market stability reserve (MSR) in 2019 - two years earlier than originally planned.

Approximately two billion backloaded and unallocated allowances will be put into the MSR before they flood the market at the end of the decade.

The current surplus "supresses the carbon price" and means Europe's worst polluters are "not held to account over their emissions", according to green groups.

Liberal Democrat MEP Catherine Bearder said in a statement: "This landmark deal will give a long-term boost to green investment and reduce our reliance on imported fossil fuels.

"It also sends a powerful signal to the rest of the world that Europe is serious about tacking climate change in the build-up to global talks in Paris later this year.

Renewables industry

The European Wind Energy Association (EWEA) also welcomed the deal, but added that it fell short of their ideal reforms.

EWEA director of public affairs Ivan Pineda said: "The start date of 2019 shows that Member States are prepared to compromise. It is also pleasing to see that a substantial number of excess allowances will not be returning to the market and will instead go directly into the reserve.

"But we have to acknowledge that Member States and the Parliament could have been far more ambitious in the shake-up of the carbon market and that much more comprehensive reform is needed in order for this instrument to provide a meaningful signal to investors."

The EU climate commissioner was also satisfied with the negotiations: -

The ETS covers 12,000 of Europe's most polluting factories and power stations. Despite the glut of allowances, emissions covered by the scheme fell by 4.4% last year, thanks to the rise of renewables and a mild winter.

Brad Allen


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