No further fixes for EU ETS before MSR launch, says European Commission official

Published 19:23 on March 2, 2016  /  Last updated at 19:23 on March 2, 2016  /  EMEA, EU ETS  /  No Comments

The European Commission will not propose further measures to address low carbon prices or the oversupply in the EU ETS before 2020, a senior Commission official said Wednesday.

The European Commission will not propose further measures to address low carbon prices or the oversupply in the EU ETS before 2020, a senior Commission official said Wednesday.

Speaking at the Argus Emissions Markets conference in Amsterdam, Peter Zapfel said that the Commission will take no further action to intervene in the EU carbon market until the MSR is introduced in 2019 and has been given a chance to work.

EUA prices have collapsed by some 40% since the beginning of the year to around €5 currently, a sell-off market participants have attributed to a range of factors including speculative positioning, utilities changing their hedging strategies, and industrials dumping surplus supply.

This has prompted some to call for European lawmakers to step in with additional measures following tough negotiations surrounding the implementation of Backloading in 2014-16 and the introduction of the MSR in early 2019.

Zapfel added that concerns over the impact of a potential overlap of EU climate and energy policies on the ETS were overblown.

“I sometimes think we are exaggerating this debate about overlapping policies,” he said.

“If you go back over the past five or ten years, the Commission has systematically in its impact assessments looked at the effects of reducing greenhouse gas emissions, boosting energy efficiency, improving the share of renewable energy.  This is for the 2020 climate and energy package and the 2030 climate and energy framework,” Zapfel added.

“We analysed these things, they have been discussed, [and] our leaders have decided on their ambition levels in those three areas.”

“And let’s not forget the MSR,” he added, suggesting that the mechanism would be robust enough to tackle these issues.

Calls are growing from industry and green groups for EU lawmakers to spell out how Europe’s carbon market can be the bloc’s driving policy for emissions cuts amid a raft of competing instruments.

Many stakeholders want the issue to be a top priority for lawmakers as they work on post-2020 reforms to the 11-year old EU carbon market, a process expected to be finalised sometime next year.

But Sarah Deblock of emissions trading association IETA noted that there’s been a lack of recognition by the European Commission and some EU member states that overlapping policies pose a problem to the ETS.

“This needs to become the number one priority and greater coordination of emission reduction measures is needed, otherwise we risk continuing the situation of oversupply,” she told Carbon Pulse.

IETA in January highlighted its earlier study that found overlapping EU-level policies, such as the proposed renewable energy and energy efficiency initiatives, could reduce the ETS’ effectiveness by upwards of 1 billion tonnes by 2020, more than half the scheme’s annual cap.

And energy traders’ lobby EFET earlier this year also warned that the European Commission needs to take necessary steps to avoid the ETS playing a “residual role”.

By Mike Szabo –


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