The European Commission confirmed on Friday that it will announce plans next week to withhold carbon allowances to support the struggling Emissions Trading Scheme (ETS), which has suffered a collapse in prices under the burden of oversupply.
It has decided on a two-step process to reinforce the legality of what is meant to be a relatively quick fix to the market’s weakness. Concerns about possible delays and lack of detail about next week’s announcement drove ETS prices sharply lower earlier in the week.
At a meeting on July 25, the EU’s executive will adopt a proposal clarifying an article of the ETS law on the timing of auctions of permits.
Commission spokeswoman Pia Ahrenkilde Hansen said the Commission would also “transmit to member states a draft for a future adaptation of the timing when emissions allowances would be auctioned”.
She added that all interested parties would be able to express their views on the proposal for the delaying of carbon allowance auctions, referred to as backloading.
The Commission would not say how long the process will take, but EU sources said that it hopes the use of a streamlined EU procedure — known as comitology — for the backloading proposal will allow it to be completed within months. Other methods of passing EU legislation can take substantially longer.
The legal amendment could also be agreed through an accelerated procedure, lasting months rather than years, provided that there was political will, the sources said.
Next week’s announcement follows a pledge from Climate Commissioner Connie Hedegaard that she would come up with a plan before the August recess in Brussels, when the European Parliament and the Commission suspend work for up to a month.