(updates with details)
– EU president Latvia yesterday sent member states an MSR proposal based on the plan agreed by the EU Parliament’s environment committee (ENVI) in February and aiming to bridge the gap between the negotiating positions of the eastern and western European camps, a spokesman for the Latvian government told Carbon Pulse.
– The document, seen by Carbon Pulse, was sent out in preparation of next week’s meeting and outlines parliament’s position and the presidency’s suggested position for national governments.
– Latvia will convene a working group to discuss its proposal next week, which is scheduled for Tuesday Mar. 10.
– The document matches the ENVI’s position to put the 900 million backloaded EUAs directly into the MSR.
– It makes no reference to an ENVI amendment to put unallocated EUAs directly into the MSR. It instead said any large increase in supply due at the end of a trading period should be sold more gradually in the first two years of the next period.
– ENVI’s plan sees the unallocated EUAs put in the MSR. Analysts have said these allowances, such as those in the New Entrants Reserve, could amount to between 600-750 million by 2020, and have a major bearing on the market’s balance.
– The presidency proposal said the MSR should operate from Jan 1 2019, which could effectively mean very little difference from the vaguer ENVI text to establish the MSR in 2018 and have it operational by Dec 31 2018.
– With similar provisions for two out of the parliament’s three big amendments, analysts at Thomson Reuters Point Carbon predicted the presidency proposal would lessen the carbon price-boosting impact by just €1 on average over 2016 and 2030.
– Once the national government officials agree on a position, usually by consensus but sometimes by qualified majority voting, the presidency has a mandate to negotiate a final text with the Parliament.
By Mike Szabo and Ben Garside – email@example.com