European Parliament Set to Delay Auction of Pollution Allowances under EUETS

19 February 2013: The Committee on Environment, Public Health and Food Safety of the European Parliament has voted in favor of a draft amendment to EU legislation that would allow the European Commission to delay the timing of the auctioning of some pollution allowances under the EU Emissions Trading System (EU ETS).

The amendment was approved by the Committee on 19 February 2013. It will allow the European Commission to “backload” or delay the timing of auctions “in exceptional circumstances,” provided an impact assessment shows that there is no “significant risk” of such action resulting in companies relocating outside the EU. The Commission is also restricted to making only one such adaptation.

The backloading measure was considered necessary due to the growing surplus of pollution allowances, which is deemed to have contributed to the fall in carbon prices below the levels estimated when the ETS was created. It will reduce the supply of allowances, with the expectation that this would result in an increase in the price of carbon. Noting that this delay in the auctioning of some allowances would be a temporary, but positive step, the Chairman of the Committee, Matthias Groote, who is steering the legislation through Parliament, stated that “a stronger carbon price will help catalyze Europe's transition towards a low-carbon economy.”

The next step will be for the Parliament to put the measure to a vote in plenary, scheduled for April 2013. The Committee plans to vote on whether to negotiate an agreement with member States before this. [European Parliament Press Release] [Amendment Procedure File]