EU institutions’ disagreement on carbon set-aside continues
The European Council and the Danish presidency are still unwilling to support a legislative measure that could support carbon prices, it emerged on Wednesday.
But news of policy-makers' intransigence on the set-aside had not trickled out to the carbon market by 16:30 hours London time on Wednesday.
This follows a meeting on the Energy Efficiency Directive (EED) between representatives from the European Council, the Parliament and the Danish presidency.
The trialogue meeting was scheduled to further discuss several topics within the Directive, including the so-called set-aside (see EDCM 11 April 2012).
But while there is room for some flexibility on other issues to be included in the white paper, negotiations seemed to be harder when it came to the set-aside. "It was a very constructive talk, the Parliament presented their view, the Council responded and there was then a brief dialogue. It is clear that we need some flexibility on several issues," a spokesman for the Presidency said. He added, however, that the Danish presidency is still "not willing to consider the set-aside".
Opposite positions
The Parliament is asking for the measure to be included in the Directive, whereas the Danish presidency previously suggested that this could put at risk the adoption of the Directive altogether (see EDCM 25 January 2012).
The EU presidency set the adoption of the EED as one of its main targets to achieve within their six months in charge. But because the set-aside measure is particularly controversial, having been blocked by Poland in the past, it could be better to freeze it for the time being, Danish energy minister Martin Lidegaard previously said (see EDCM 25 January 2012).
"The set-aside was not included in the Commission's guideline for the EED. We're still not willing to consider it," the spokesman for the presidency said to ICIS on Wednesday.
However, talks will continue as the next meeting between the EU institutions is scheduled for 24 April. "We're now working on some technical documents, which will hopefully be ready by then. If these won't be ready, we'll wait before meeting again," the spokesman added.
Market impact
The set-aside could reduce the number of carbon allowances in the EU Emissions Trading System (ETS) before phase III begins next year and hence supporting carbon prices. After prices dropped to a historic low last week, analysts warned that without a set-aside the collapse would accelerate (see EDCM 4 April).
Ahead of the meeting, market participants had been apprehensive that news of the meeting would drive prices on Wednesday. The meeting outcome should have been bearish for carbon prices. But as the news had not hit the market in the run-up to the close yet, benchmark EUA prices pushed back above €7.00/tCO2e on Wednesday.
"Nothing came out of the [trialogue] meeting," one trader said, adding that rising oil prices and technical trading were behind Wednesday's bullish carbon market. MM/VF
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