Europe should consider improving its carbon market by curbing an oversupply of permits, imposing a reserve price at auctions and setting 2030 emission-cutting goals, said Cyprus’s Environment Minister Sofocles Aletraris.
Policy-makers in the 27-nation European Union are considering options to strengthen the world’s biggest emissions- trading program after the price of allowances slumped to a record on April 4 amid a recession and debt crises in the region. Action to reinforce the cap-and-trade plan is justified as the situation serves “neither the economic nor the environmental interests of Europe,” Aletraris said.
“Cyprus believes that an appropriate response would be the adoption of a policy consisting of a triad of mutually reinforcing measures addressing three distinct needs,” Aletraris, whose country takes over the EU’s rotating presidency in July, said in an e-mailed response to Bloomberg questions.
The emission caps that the European emissions trading system, also known as the EU ETS, imposes on more than 12,000 facilities owned by manufacturers and utilities were set before the economic slump, which curbed industrial output.
The program will be oversupplied by permits covering around 1.1 billion metric tons of CO2 discharges by 2012, an amount equal to about half of the annual emissions limit in the current five-year trading period of the ETS that started in 2008, according to Bloomberg New Energy Finance. This surplus may be transferred into the next stage that runs from 2013 to 2020 and is referred to as Phase 3.