German minister backs EU proposal to squeeze carbon market
BERLIN |
BERLIN (Reuters) – Germany’s environment minister has come out in support of a European Commission proposal to prevent the collapse of its instrument for cutting carbon emissions by withdrawing some emission permits from the market.
Peter Altmaier, an influential figure in Chancellor Angela Merkel’s Christian Democrats (CDU), told Reuters he hoped the ruling centre-right coalition could agree to support it in time for a European Union summit in December.
“The European Commission in recent weeks made new proposals which show a sense of proportion and reality,” he said in an interview on Monday, adding this would help stabilize trade in carbon permits and give business an incentive to reduce CO2.
The EU’s climate chief, faced with a slump in the price of emissions as the economic slowdown crushes demand and creates a huge surplus of allowances, last week proposed a temporary fix while Brussels works on longer-term reforms.
This involves deferring the auction of 900 million permits that would have been sold between 2013-2015, the first three years of the next phase of the EU Emissions Trading Scheme.
In a process known as backloading, they would instead be auctioned at the end of the phase, in 2019-2020. European Energy Commissioner Connie Hedegaard said last Wednesday that market operators needed a decision on this from the EU by year-end.
“I personally believe this is the right proposal and I hope the German government can come to a coordinated position by December,” said Altmaier.
However, the energy portfolio in Germany is effectively split between Altmaier and Economy Minister Philipp Roesler, who heads the Free Democrats (FDP), the CDU’s junior allies in the ruling coalition. Theirs is not always an easy partnership.
One of Roesler’s deputy ministers, Stefan Kapferer, said last week the Commission proposal was unnecessary because “the market mechanism has so far made a key contribution to a drop in Europe’s CO2 emissions”.
Carbon emissions trade is aimed at pushing industry towards cleaner energy by making it dearer to burn coal. But with demand for power flagging, the market has been flooded with permits.
Until Monday, the EU’s biggest economy Germany had not taken a position, while its coal-dependent neighbor Poland and the heavy-industry lobby have led opposition to anything that would drive up the price of carbon allowances.
Energy companies ranging from oil major Royal Dutch Shell to First Solar are among those clamoring for a stronger carbon price to drive innovation and
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