German election result boosts prospect of back-loading
The German election result on Monday renewed hope that Europe’s most powerful country will lend support to back-loading, as the measures’ critics in the previous government fell out of favour with votes.
The news was expected to boost carbon prices on Monday, and by mid-afternoon London time EU allowances (EUAs) were trading above Friday’s close.
While Chancellor Angela Merkel’s Christian Democratic union (CDU)/Christian Social Union (CSU) party did better than anticipated, securing a near-majority at nearly 42%, the liberal Free Democratic Party (FDP) unexpectedly failed to secure the 5% needed to enter parliament and return to a ruling coalition. It received only 4.8%, the party’s weakest result since its creation in 1948.
FDP Chairman Philipp Rosler, Vice-Chancellor and Minister of Economics and Technology in the outgoing government, resigned on Sunday night in response to his party’s poor performance. He was the most vocal opponent of the back-loading proposal in the government and succeeded in blocking Germany’s support for the measure prior to the election. The development could mark a turning point in the internal stalemate that has prevented the country from taking a clear position on intervening in the EU emissions trading system (ETS) to boost prices.
“With [the] FDP now out of the way, the future of the EU ETS back-loading proposal looks[...] brighter,” commented Laurent Donceel, account director at g+europe, a Brussels-based consultant firm specialising in European Union political strategy and policy development, on Twitter on Monday.
Similarly, Martijn Verdonk, a climate and energy policy analyst at the PBL Netherlands Environmental Assessment Agency tweeted: “Adopting back-loading of EU ETS allowances seems more likely now [that] German coalition partner FDP has lost in elections”.
Although Merkel had indicated before the election she would like to return to a coalition government with the FDP, the election result means she is now forced to look elsewhere for a grand coalition partner party - leaving the social democrats, the SPD (26%), and Green Party (8.4%) as likely candidates. Both parties are pro back-loading and tried to force the outgoing government to signal support for the measure prior to the election ( see EDCM 20 September 2013 ).
Analysts have previously said official support for back-loading from Germany would prompt other countries to follow its lead and subsequently help the measure secure a qualified majority in the European Council.
Apart from boosting the proposal’s chances at EU level, the conclusion of the German election also means that negotiations can resume soon. Climate commissioner Connie Hedegaard said in the summer that the back-loading talks were on ice until after the crucial German elections ( see EDCM 29 August 2013 ).
When back-loading can be next discussed will depend on how German coalition talks progress. “The coalition negotiations could be lengthy and therefore we do not see any chance for a Council vote on 14 October,” carbon analytical firm Tschach solutions, now part of ICIS, has previously said. Marie-Louise du Bois
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