EC says backloading plan to start mid-March
The European Commission’s plan to delay 900 million mt of CO2 allowances from auctions over the next three years is expected to begin in mid-March. This plan is known as backloading and the objective is to lift carbon prices, incentivize firms to curb their greenhouse gas emissions and rebuild confidence in the ETS – the bloc’s main weapon against climate change.
The Commission, the 28-nation European Union executive, said it has started preparatory work with member states and exchanges to reduce carbon permit sales by 400 million units this year.
The backloading plan was approved in January amid fierce opposition from coal-reliant Poland and after months of squabbling by lawmakers in the European Parliament.
Following the plan’s endorsement, the Commission asked that the normal three-month scrutiny period required before the bill became law be cut to allow intervention to begin sooner. That was approved by parliamentarians last week and is now scheduled to get a final nod from EU ministers on Feb. 24. “The Commission welcomes the European Parliament’s decision to shorten the scrutiny period for and to endorse the draft amendment of the EU ETS Auctioning Regulation on backloading,” the EC said in a statement.
Carbon prices have risen in anticipation of the plan’s approval, with the front-year futures hitting a 13-month high of 6.74 euros per tonne of carbon dioxide on Feb. 6.
While still well below the 30-euro levels touched in 2008, prices are up by more than a third since December, making carbon one of the world’s top performing commodities so far this year.
The Commission proposed backloading after Europe’s economic slowdown left a massive oversupply of permits that caused carbon prices to crash to under 2.50 euros a tonne last year.