Brussels hosted a range of EU ETS-related debates this week, including lawmakers from the European Parliament’s environment and industry committees beginning to dissect the European Commission’s post-2020 reform proposal. Carbon Pulse rounds up the key developments.

Environment committee (ENVI) members discussed whether the Paris Agreement required the 28-nation bloc to revise its 2030 goals, while the industry body (ITRE) held its first exchange on the Commission’s ETS proposal.

However, one of the most notable interventions came in a different sitting, when UK MEP Ian Duncan raised the prospect of cancelling EUAs to counter the effect of other EU policies during a debate assessing the effect of the bloc’s Energy Efficiency Directive.

He “recognised there should be a greater national element within the Energy Efficiency Directive, and he was open to considering a mechanism whereby member states could voluntarily surrender allowances,” according to a summary of the meeting compiled by monitoring service One Policy Place.

Duncan, who is steering the EU ETS revision bill through parliament, said it had been clear that there has been an overlap of competing legal provisions, and that this has negatively affected EUA prices.

Duncan cited coal plant closures caused in part by the UK’s carbon floor price, as well as other unilateral national measures that had hit ETS installations, saying that EUA cancellations could potentially nullify these policies.

The remarks follow growing calls from industry and green groups for regulators to spell out how Europe’s carbon market can be the bloc’s driving policy for emissions cuts amid a raft of competing instruments that could dampen EUA demand.

The Commission insists that it has considered the effects of other policies in its ETS reform plans and that the forthcoming MSR will be sufficient to absorb the impact.

ENVIRONMENT COMMITTEE

ENVI responded to a paper by the European Commission that rejects calls to immediately deepen the bloc’s 2030 goals following the Paris Agreement. They showed little appetite to pressure for more ambition.

Out of the committee’s seven senior MEPs representing the political groupings, only the smaller Green and EFDD representatives urged the bloc to bring the EU target in line with its commitment in Paris, according to One Policy Place.

Dutch Green MEP Bas Eickhout called the Commission paper “one of the weakest communications he had seen on the climate in the last couple of years”, while EFDD’s Eleonora Evi added that the proposed deepening of ETS’s annual cap reduction was “not nearly enough”.

At a Mar. 4 Environment Council meeting, the bloc’s environment ministers were split on the need to deepen the bloc’s 2030 goals.

Anita van den Ende of the Netherlands environment ministry, which chaired the Council talks, told the MEPs that during the course of the closed-door meeting, all ministers had agreed that they needed to show ambition and move forward as quickly as possible, but that “it would also be important to have a clear picture of the measures to implement the 2030 regulatory framework.”

INDUSTRY COMMITTEE

MEPs in the industry committee held their first formal debate on the Commission’s reform proposal, with most focusing their attention on how to protect the bloc’s big emitting manufacturers from any measures that would raise carbon prices.

The industry committee has ceded control to the environment committee on drafting most amendments of the bill, but it has joint control over some elements such as the two proposed funds and some carbon leakage issues.

Esther de Lange said her centre-right EPP grouping was still finalising its views, but stressed that more free allowances could be needed in certain cases and the bill could require more fine-turning to render it more up-to-date with industrial production data.

“Certain sectors are big emitters, but we are struggling with the fact that [these sectors] are two-to-three times cleaner than their counterparts in China. Becoming dependent on other parts of the world for these strategic sectors would be a mistake,” she said.

Liberal MEP Frederick Federley, who is steering the bill through ITRE, said that the fixed volume of allowances proposed would not be enough for all industrial sectors in Europe.

He said the committee would discuss the bill again on May 23, ahead of a final July 23 deadline to submit amendments, and will vote on the bill on Oct. 13, some two months ahead of the environment committee and at least three months ahead of a full parliament vote.

The Commission’s top climate official Jos Delbeke addressed the committee, and was dismissive of two of the French government’s recent ETS reform ideas.

On France’s suggestion of a border control measure for foreign cement producers, he said that EU leaders had already chosen not to follow the border control route when they set the 2030 goals in 2014 and that the Commission’s proposal had followed this guidance and continued with a system of free allocation.

“How can we come with that (border adjustment) post-Paris? It would be very odd,” he said referring to the Paris Agreement binding all nations to cut emissions.

On France’s price corridor idea, Delbeke also said the Commission proposal had followed EU leaders’ guidance to avoid the regulation of prices.

“We have the experience of the CAP [Common Agricultural Policy] and we deliberately left that aside, working within the constraint of Council conclusions,” he said.

By Ben Garside – ben@carbon-pulse.com