In an attempt to revive carbon prices in the EU Emissions Trading Scheme, the European Parliament’s Environment Committee voted yesterday in favour of postponing the auctioning of 900 million pollution allowances. The market’s reaction to the vote? A 20% slump in the price of EU allowances.
The European Parliament’s Environment Committee (ENVI) voted by 38 votes to 25 votes in favour of the proposal. There were two abstentions. For a list of how each of members of ENVI voted, click here (pdf file 979.4 kB) and scroll down to “Roll Call 4 Final Vote”.
This is not the end of the matter though. The vote is only a recommendation for the 754-seat European Parliament. ENVI delayed a vote on whether to take the discussion to the European Parliament, or to fast-track the process through a “trilogue” negotiation between the European Parliament, the European Commission and member states. That vote will take place at ENVI’s next meeting on 25 and 26 February 2013.
Here are some of the reactions to the vote yesterday. Several NGOs and Greens welcomed the vote as a step in the right direction. Meanwhile, over 100 organisations have signed on to a declaration to scrap the ETS. If your organisation wants to sign on, please send an email to .
“The EU ETS should be scrapped. It has failed to reduce emissions. It does not provide an incentive for polluting industry to restructure or to invest in renewable energy. Every NGO that cares about the climate, rather than keeping industry happy, should sign on to the petition to scrap the ETS. Carbon markets are getting in the way of genuine climate solutions.”
— Chris Lang, REDD-Monitor
“The ETS is not dead. The patient is in the ambulance now but will need further treatment in hospital.”
— Sam Van Den Plas, EU policy officer at WWF
“The market realised that there are more negotiations and votes to follow and, therefore, it didn’t show any sign of relief but traded straight to the downside, indicating that the market remains sceptical as to whether politicians will support the measure in the end.”
— Marcus Ferdinand, analyst at Point Carbon
“The fast-track mandate is an option and not a requirement. The fact Parliament did not decide today will likely prove inconsequential. Beyond the ‘buy the rumour, sell the fact’ element, the price decline likely came from disappointed traders who were expecting an intraday rally to maximise profit-taking potential.”
— Matthew Gray, analyst at Jefferies Bache
“We don’t have clarity about what the next move will be. [The vote was] a good first step and a strong political signal about the environment committee’s support… Without the mandate, there’s no certainty when talks with member states will start and how long the whole legislative process will take. Members of Parliament should endorse the start of trilogue negotiations next week for the backloading proposal to move forward and for the debate to focus on structural measures for the EU ETS.”
— Sarah Deblock, International Emissions Trading Association
“The environment committee has sent a clear signal in favour of a strong and healthy emissions trading system. A stronger carbon price will help catalyse Europe’s transition towards a low-carbon economy. Creating the EU ETS was a landmark achievement but there is also a learning process. Delaying auctions is only a temporary fix, but it is a positive step.”
— Matthias Groote, Environment Committee chairman
“MEPs have today taken a step towards shoring up the flagging EU carbon market… However, the Greens caution that this ‘backloading’ measure is merely a temporary, quick fix… Returning 900 million permits to ETS at a later date would be like throwing petrol on a fire. We urgently need more durable structural solutions, notably on permanently retiring emissions allowances to address the oversupply, and not simply postponing the auctioning of permits.”
— Bas Eickhout, Green spokesperson and Netherlands MEP
“Today’s vote is a promising first signal that policymakers recognise the current threats to the EU ETS and are prepared to salvage it, along with the EU’s international reputation for leadership on climate change. They must now press ahead to withhold these allowances from auction, before making the permanent repairs that the scheme desperately needs. That is the only way the policy can stay relevant and deliver the cost-effective emissions reductions it was designed for.”
— Damien Morris, Sandbag
“Despite the vote, there’s little reason to celebrate today. The EU’s carbon market was saved from complete redundancy, but there’s a long way ahead to ensure it becomes a meaningful tool for greening Europe’s economy. The backloading proposal might slow the slide in the carbon price, but permanent cancellation of allowances and strong 2030 targets are essential if it is to achieve its aims.”
— Joris den Blanken, Greenpeace
“MEPs are working with the options on table, but there is no getting round the fact that no amount of fiddling with the ETS will make the system fit for the challenge of tackling the climate crisis. The real priority must be for the EU to set a tougher greenhouse gas emissions reduction target for 2020 in line with what science and justice tells us is needed to address climate change. The EU must also agree on binding targets for 2030 for greenhouse gas emissions, energy efficiency and renewable energies.”
— Brook Riley Friends of the Earth Europe
Excellent. So long as we know that traders expected that there would be an “intraday rally to maximise profit-taking potential”, we can all rest comfortably in our beds, assured that the climate is being well taken care of by the carbon markets.
I’m just gutted for the poor b*stards that they didn’t actually get to do their ‘profit-taking’, only more losses. There goes another Porsche’s worth of bonuses…