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MEPs to take step towards supporting carbon price(www.guardian.co.uk)

 

European politicians are expected on Tuesday to vote through an amendment that could pave the way for direct intervention in the EU carbon market, which has sunk to record lows.
Businesses and environmentalists have heaped pressure on the European Commission to bolster the EU Emissions Trading Scheme. The bloc's flagship tool for cutting carbon emissions greatly suffered under the burden of a sovereign debt crisis and oversupply, which the amendment would seek to address by reducing availability of allowances.
The current carbon price of less than €7 ($9) per tonne is regarded as too low to encourage investment in green energy. For that, prices would need to reach somewhere between €20 and €50.
"We have not voted yet, but I expect broad, cross-party support for the compromise amendment," Dutch Green MEP Bas Eickhout. "A broad majority in the parliament is really concerned about what's going on with the carbon price."
The vote is not binding. If passed, it would require a further vote next year and debate by member state governments.
But it would "send a strong signal", Eickhout said, and could help to break the deadlock within the commission, which has stalled for months on the issue. The commission would comment "in due course", a spokesman said.
Opposition to intervention has come from heavy industry, which benefits from a low carbon price, while firms calling for action have included Royal Dutch Shell, who are keen for a price high enough to justify technology such as carbon capture and storage.
Following a letter last week to the president of the European Commission, 15 companies and lobby groups ¨C including Dong Energy, Alstom, Vestas and Shell ¨C issued a joint statement on Sunday, calling on the European Parliament to back measures to support the trading scheme. The joint statement said withholding allowances was "essential to restoring confidence in the EU ETS".
Although the parliamentary vote would not be binding, another signatory of the statement, the consultancy group E3G, said the show of broad political accord could sway the commission.
"We are at a do-or-die moment," said Sanjeev Kumar, senior associate at E3G. "If they get the vote wrong, billions of euros could be wiped out alongside our future."
The amendment proposes withholding "a significant amount of allowances" before the start of the third phase of the EU carbon market, which begins in 2013. A separate amendment proposes setting aside 1.4bn tonnes of carbon allowances ¨C a figure dating back to a commission document from May last year on how to increase the EU's ambition on cutting its carbon emissions.
"A tighter [trading scheme] cap would raise the level of environmental achievement and would have the effect of strengthening the incentive effect of the carbon market," the May 2010 text said. "Reducing (carbon) auctioning rights by 15% over 2013-2020, representing 1.4bn allowances, could be sufficient."
For some environmentalists, such as the wind lobby, raising the EU's green ambitions is the most obvious way to increase the carbon price.
They say the current targets of a 20% cut in emissions and a 20% increase in the share of renewables in the energy mix by 2020 are not ambitious enough.
The compromise amendment is within the context of the proposed Energy Efficiency Directive, which deals with a third target of improving energy efficiency by 20%. So far the EU is far from achieving that and ironically, progress on efficiency could punish the carbon price further, underlining the need for action to support it.
Denmark, which takes over the rotating EU presidency from the start of next year, has a strong domestic commitment to green energy and has also said the environment will be a priority for its presidency.
Environmentalists are looking to the presidency and climate commissioner Connie Hedegaard, also a Dane, to build on the EU's achievement in Durban in bringing the Kyoto Protocol, the only global treaty on tackling climate change, back from the brink.
"In our view it puts a lot of pressure on Europe to act decisively where and when it can on climate and energy policy," said Jason Anderson, the head of European climate and energy policy at WWF, of the outcome of the Durban talks. "With the ETS in dire need of reform, the first opportunity is already upon us."

 

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