Germany Backs Carbon Price in EU Emissions Push

Posted by Joseph Keefe

Germany will back a plan to strengthen carbon prices,
a senior official said on Tuesday, ahead of a meeting of European
Union environment ministers on balancing the needs of industry
with cutting emissions in reforming the carbon
market.

EU member states such as Germany, Italy, Austria and Greece are
prioritising measures to ensure that regulation does not drive
big industry abroad, while poorer, coal-reliant nations in
Central and Eastern Europe are keen to get the most generous
provisions possible to help modernise their economies.

Last week the European Parliament adopted a draft reform of the
EU's emissions trading system (ETS) and environment ministers
meeting in Brussels are keen for swift adoption of what will be
its first big piece of climate legislation since the EU ratified
the Paris accord on global warming.

The cap-and-trade permit system is the EU's flagship policy for
meeting its climate goals by regulating emissions at 11,000
industrial and power installations. It has suffered from excess
supply since the financial crisis, which depressed prices.

But EU nations are divided over the level of ambition in measures
to strengthen prices, how much protection industry needs to
remain competitive and how best to manage funds to help laggards
modernise their economies.

Sweden and France are leading a push to shore up carbon prices by
doubling the rate at which the scheme's Market Stability Reserve
soaks up excess allowances and a mechanism for cancelling surplus
permits after five years.

Although ten nations back this plan, EU diplomats had feared it
will not carry enough weight without Germany's backing. A minimum
of 16 member states is required to back the compromise deal,
representing at least 65 percent of the total EU population.

"The MSR has to be strengthened, we support that," Jochen
Flasbarth German state secretary for the environment told
journalists ahead of Tuesday's meeting. But big differences
remain on other aspects of the reforms: "We have a lot to discuss
... with a bit of flexibility we can get there."

The ETS is the EU's main tool to achieve its goal of a 43 percent
cut in greenhouse gases from industry and power plants compared
with 2005. If ministers fail to find common ground, they will
next take up the issue in June, delaying reforms.

"Europe has to keep its leadership in the climate arena," French
Environment Minister Segolene Royal told reporters. "We have to
protect our industries but only up until a certain point, without
it leading to a fall in the carbon price."

By Robert-Jan Bartunek

Feb 28, 2017

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