Bloomberg News

EU Carbon Trades Near One-Week Low as Biggest Party Split on Fix

June 20, 2013

European Union carbon permits trade near a one-week low amid signs the biggest political party in the bloc’s Parliament is still divided in its support for an emissions market rescue plan.

EU allowances for December closed 0.9 percent higher at 4.43 euros a metric ton on the ICE Futures Europe exchange in London after earlier dropping to 4.30 euros, the lowest since June 12. The contracts dropped as much as 7.2 percent yesterday after the Parliament’s environment committee recommended approving a watered-down proposal to delay the sale of some carbon permits.

The panel voted 44 to 23, with one abstention, against a motion to block the measure, while committee members from the European People’s Party, the biggest group in the Parliament, voted 12 to 11, with one abstention, in favor. EPP lawmakers held a preparatory meeting before yesterday’s vote on June 18, where a majority favored the compromise solution.

“The meeting on Tuesday evening was very chaotic and certainly did not reflect the real situation in the group,” Eija-Riitta Korhola, the EPP lawmaker in charge of the proposal in the group, said by phone today. “Some members weren’t even able to come. Even for me, the changed voting list came as a big surprise.”

The latest version of the measure, designed to reduce a surplus of emission permits and boost carbon prices, goes to a plenary vote on July 3. The original proposal was rejected by the assembly in April.

Tie Hands

A majority of EPP members were against the first plan in the Parliament’s April vote, when the assembly sent it back to the environment panel for further talks. The party will decide on its position for the July plenary ballot next week.

“I wanted to emphasize before the vote that the compromise can’t tie the hands of EPP members because we didn’t have a debate where we would commit to such a compromise,” Korhola said.

The proposal includes postponing sales of carbon permits and returning, or backloading, them to the market one year after the allowances are withheld. The European Commission, the EU’s regulatory arm, originally proposed delaying permits in the three years through 2015 and returning them at the end of the decade.

All 17 members of the Socialists and Democrats group, six members of the Greens group, three lawmakers from the European United Left-Nordic Green Left group and one independent opposed the rejection of backloading yesterday. Liberals voted six to two against the motion to block the market fix.

Six members of the European Conservatives and Reformists group and three of the European Freedom and Democracy voted in favor of the amendment to reject the rescue plan.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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