EU countries back lighter back-loading option
European countries back a swift implementation of back-loading EU allowance (EUA) auctions over three years rather than two, the European Commission said on Wednesday. The final vote on the issue will come only in January.
The Commission said on Wednesday that no formal decisions have been taken, but most EU countries have “called for a swift implementation” of back-loading in a key meeting.
Countries support potentially removing
• 400m EUAs in 2014,
• 300m EUAs in 2015,
• 200m EUAs in 2016,
• and introduce the possibility to spread some of the 2014 volumes over the next two years, in case of a late start to the back-loaded auctions.
Countries in the climate change committee (CCC) met on Wednesday to discuss which back-loading profile to implement after the European Parliament on Tuesday approved the Commission’s proposal to delay some of the scheduled auction supply to support carbon prices in the EU Emissions Trading System (ETS) ( see EDCM 10 December 2013 ).
Two other options apart from the preferred auction profile were on the table at the meeting:
• to remove 400m EUAs in 2014 and 500m in 2015;
• or to remove 400m in 2014, 300m in 2015 and 200m in 2016, without any possibility to change the 2014 amount.
In all cases, the 300m will be sold in auctions to be held in 2019 and 600m in 2020.
Traders said the news had a mixed impact. On one hand, it spreads the implementation of back-loading over a longer period of time, with the quota for 2014 potentially being lower that 400m. This would be bearish for prices.
But on the other hand, it clearly indicates that a decision will come in January, which is bullish.
Once adopted, the decision of the CCC will require a three-month scrutiny period, which means back-loading could start in April or May.
The Commission also confirmed that the parallel legislative process is scheduled to conclude at the Agriculture and Fisheries Council on 16 December and will be signed off without discussion.
In the legislative process, EU bodies are amending the EU Emissions Trading System (ETS) directive to give the Commission the powers to change the auction calendar in the first place. Silvia Molteni
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