European Parliament backs ETS proposal

A majority of the Environment Committee in the European Parliament voted in favour of the Commission’s proposal on ETS earlier today and is thereby sending a clear signal to the 27 member states regarding the importance of supporting the European ETS. The decision strengthens the opportunities for a transformation of the European energy market.

This morning, the Environment Committee voted in favour of the European Commission’s proposal on backloading with 38 votes in favour and 25 votes against. Two members of the committee abstained. The proposal means that the Commission now has a mandate to implement a temporary postponement of the auction of 900 million emission allowances within the next three years, which is equivalent to 30% of the entire amount of allowances at the European market. This is meant to support the price for allowances within the European carbon market (EU ETS) and revitalise investments in a sustainable transformation of the energy sector.

-The positive outcome of today’s vote is a strong signal from the Parliament showing that they continue to support a green transformation of the European energy system. When we use pan European instruments such as the ETS, we avoid more costly national strategies that could possibly hurt the European competitiveness. At the same time we strengthen the transformation of the energy sector in the whole of Europe. In other words, backloading is the first important step towards a stronger ETS and a sustainable transformation, says Ulrich Bang, Director of European Affairs at the Danish Energy Association.

The Commission’s backloading proposal springs from a wish to create growth and jobs through a transformation of the European energy sector. By making it more expensive to pollute by using coal in generation you create an incentive to invest in sustainable energy sources, Combined Heat and Power production and energy efficiency, all of which promotes the competitiveness and the future security of supply of the EU.

-A single European price on emission allowances in the EU through the EU ETS is of vital importance in relation to securing the most cost effective transformation of the energy system. The reality of the market today dictates investments in coal because of the low carbon price and there is a danger that Europe gets locked-in in an energy production based on fossil fuels if action is not taken now. Backloading is not the ideal solution but it is what is on the table and it does not matter much that the Member States and organisations excuse themselves from taking a stand on backloading by referring to the fact that the proposal is not effective enough. Backloading is an important first step, says Ulrich Bang.

By supporting the proposal the Parliament has lead the way forward and the Danish Energy Association now hopes that the Member States and especially Germany and Denmark will follow through. A number of progressive countries, including Sweden, UK and the Netherlands already support the backloading proposal.

Connie Hedegaard, Climate Commissioner, both needs approval from the Council and the European Parliament before the Commission can present the proposal in the Climate Committee. After approval from this committee the allowances can be withdrawn from the market and give a price effect. A long list of European companies and organisations – including the Danish Energy Association, is working dedicatedly to create a European momentum to further strengthen the ETS.