A new proposal by the European Commission identifies a multiple approach to fix the depression of european carbon market.
The strategy includes a short-term ‘backloading’ of carbon allowances, but after the summer break the Commission will present a report outlining several proposals for a structural change.
The proposal suggests to reduce the number of credits in the Emissions Trading System (ETS) by delaying the release of 400 million, 900 million or 1.2 billion of them starting from the next market issue in 2013.
Member states such as Poland affirm that the EU is on track to meet the 20% cut of carbon dioxide emissions by 2020 from 1990 levels.
According to Eu officials the market aims also to make low-carbon investments more attractive, however, with halved prices this does not occur.
Connie Hedegaard, Climate Action Commissioner, affirmed that “The EU ETS has a growing surplus of allowances built up over the last few years. It is not wise to deliberately continue to flood a market that is already oversupplied.”
Meanwhile, investments in innovative technologies such as carbon capture and storage – which are fundamental to reach the 2050 objectives- are stuck.
The Commission believes that by 2030 the capture of CO2 could account for 15% of its required emissions reductions. For a long-term solution, Brussels argues that a structural reform of the ETS is needed.
Recently the European Parliament sent a letter to the European Commission to stop the purchase of CO2 credits in developing countries related to the installation of incinerators and landfills.