The EU Parliament's environment committee's (ENVI) second vote on a draft law to prop up EU carbon prices on 19 June 2013 has brought a major legislative breakthrough. ENVI supported the text granting the European Commission the right to adapt "in exceptional circumstances" the timing of auctions, provided an impact assessment shows the sectors concerned will not face "significant risk" of companies relocating outside the EU. "The Commission shall make no more than one such adaptation and only in the third phase of ETS 2013-2020", the text adds.
Credits withheld should be reintroduced "in a predictable and linear manner starting from the year following that during which allowances have last been withheld" the text says. The original draft from the Commission proposed returning them in 2019-2020. A vote in the full assembly is scheduled for 3 July 2013.
The underlying cause of the entire problem is an economic slowdown and an over-allocation of emission permits in the period 2013-2020. The idea of one-off adaptation expressed in the recent ENVI opinion does not answer the question whether in the case of economic recovery the timing of auctions will be once more adjusted. Presumably it will not. Given EU ETS was designed a priori as a market-based scheme such political intervention poses a precedence and inevitably rises many doubts.
The above notwithstanding, certain problems, like for instance the relation of the back-loading to the derogation provided for in Article 10c of the ETS Directive, are to be resolved.