• Professional News
  • 17 April 2013

European Parliament rejects proposal to hold back CO2 emission allowances

The European Parliament has voted against the European Commission’s proposal for temporarily holding back CO2 emission allowances in the EU.

On 16 April 2013, the European Parliament voted on the European Commission’s proposal for backloading emission allowances. The proposal was rejected. The proposal would mean that 900 million emission allowances would be held back temporarily to stabilise the market for emission allowances.

The reason for the European Commission’s proposal is that the price of an allowance to emit one tonne of carbon dioxide is now as low as EUR 4, far below the average price of EUR 30 per tonne of emitted carbon dioxide which was expected when the Emissions Trading System (ETS) was introduced. One of the reasons for the low price of allowances is the financial crisis, which has reduced the demand for emission allowances.

The proposal has prompted considerable debate. Supporters of the proposal have predicted that a “no” vote from the European Parliament would mean the end of the EU’s climate policy. In contrast, opponents of the proposal have argued that implementing the proposal would mean rising prices and increased financial pressure on already heavily stressed businesses.

The European Parliament’s rejection of the proposal has put an end to the possibility of backloading the emission allowances which are to be put up for auction in 2013.

The European Commission will prepare a report on the European market for emission allowances in the course of 2013. The report is expected to cause debate about the structural measures required for tackling the current challenges of the EU ETS.

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