According to a senior European Union official the EU member states are almost certain to agree on a mandate this week to begin talks with the European parliament on a proposal to prop up carbon prices.
“I am 99 percent confident we will get a mandate on Friday,” the official close to the process who asked not be to named, told Reuters Newsagency.
Lithuania, which holds the EU presidency, has put forward the EU’s so-called ‘back-loading’ proposal for discussion at Friday’s meeting of member state officials in Brussels.
Back-loading would involve temporarily delaying the sale of 900 million permits in the EU Emissions Trading Scheme to help lift carbon prices.
The EU Parliament and the council of member states need to agree on the proposal before it can become law.
Carbon market participants, who are watching the process closely, expect the measure to be agreed but no permits to be withdrawn from the sale process until mid-2014.
Bloomberg newsagency reports carbon permits rose as much as 2.8 per cent on speculation legislative work on the back-loading fix will accelerate.
The price of emissions fell to a record €2.46 a tonne in April amid an oversupply aggravated by the region’s recession.
“Today’s news indicates that the meeting is likely to result in a green light, in which case we expect EU permits to finish the week in the range of between €5.10 and €5.30,” said Jerry van Houten, an analyst at Bloomberg New Energy Finance in London.
“But an inconclusive result and further delays remain possible, in which case allowances are likely to come under further bearish pressure.”
EU carbon allowances for December rose 1.7 per cent to €4.70 a tonne on the ICE Futures Europe exchange in London.
The bloc’s emissions trading system includes about 12,000 installations owned by power companies and manufacturers, which must surrender permits to cover their shrinking quota of carbon dioxide discharges.
Should representatives of national governments approve the mandate at this week’s meeting in Brussels, talks about the final version of the draft back-loading measure will start between Lithuania, representing member states, and the parliamentary team, led by chairman of the environment committee Matthias Groote.
The outcome of negotiations will need to be backed by the assembly and by ministers before the measure, which will enable delays of carbon auctions, becomes a law.
In the next stage, member states will need to vote on a separate regulation to set out the details of back-loading, including the exact timing and volume of allowances to be postponed.
