Germany is considering supporting a minimum EU ETS price, according to a draft environment ministry document seen by Bloomberg, in what could be an easing of the country’s reluctance towards price controls in the bloc-wide emissions market.
The German government favours an emissions market that may “include the adoption of a Europe-wide minimum price to set a sufficiently strong price signal,” according to the draft document.
It still needs to be approved by Environment Minister Barbara Hendricks as part of a 2050 climate plan Germany is crafting with the aim of getting full government sign-off this summer.
Details of the paper emerge a month after a ministry spokesman said his department was willing to consider additional reforms to strengthen the EU ETS, but that Germany favours supply-side measures, a preference that may clash with France’s idea for a carbon price corridor.
French Environment Minister Segolene Royal has said that carbon prices need to be at around €30 a tonne globally in order to change the behaviour of big-emitting industries, a level far above the current EUA price near €6.
France is pushing hard for the price corridor idea at EU level, and last week announced a domestic plan for a carbon price floor for its utilities that would apply from Jan. 2017 in addition to the ETS. Market sources are sceptical whether the measure can be in place by then, ICIS reported on Wednesday.
However, Uwe Leprich, a senior German environment agency official, pointed out last week that such unilateral action would fail in his country and it would need to deploy other policy tools to phase out its vast lignite-based power output, which can be produced more cheaply than the coal units France is targeting.
The EU-wide price corridor would require a qualified majority of support from both member states and the bloc’s parliament in a post-2020 reform process expected to be finalised Q1 next year at the earliest.
The idea has been so far met with a lukewarm response among lawmakers and the European Commission, the latter of which has proposed reforms that don’t feature price controls.
However, the backing of Germany, the EU’s economic powerhouse and top emitter, could significantly boost the proposal’s chances.
Read our Dialogue for views on whether France’s price corridor plan will gain traction among EU lawmakers.
By Ben Garside – ben@carbon-pulse.com
