In a June 19th vote at the European Parliament’s Environment Committee, a set of amendments gained majority support and reconfirmed the Commission’s mandate for a one-off intervention to correct the massive imbalances rocking the Emissions Trading System. The Commission’s proposal for backloading the auctioning of 900 million CO2 allowances, in order to temporarily stall the continued oversupply, was rejected in a 16 April vote, but the Commission referred it back to the Environment Committee for further discussion on the outcomes of parliamentary reflections.
According to the Brussels-based branch of conservation organisation WWF and CAN Europe, the compromise amendments contain loopholes, such as the provisions for a fund that would compensate energy intensive industries.
Using the economic recession as an excuse, certain business groups have objected to the backloading proposal as an “unnecessary burden” to Europe’s ailing industry. According to a June 18th statement by industry lobby group BusinessEurope, the Commission’s proposal is an “unnecessary political intervention into the ETS market”.
As shown in a number of reports compiled by the NGO Sandbag regarding the implementation of the ETS in EU member states, the free overallocation by governments of emissions allowances to selected energy intensive industries has led them to accruing large surpluses in emissions credits. This has provided Europe’s major climate polluters with an important source of income, as they are allowed to either keep for future use or sell the free surplus credits. It also serves as a major disincentive towards stepping up on innovation they will reduce their greenhouse gas emissions (CrisisWatch 14).