Dutch government calls for greater reserve EUA uptake

The Dutch government wants the rules for a proposed EU carbon market reform mechanism to be set at a level which would drive greater removal of oversupply.

The EU is discussing whether to install a market stability reserve, a proposed buffer mechanism to better regulate supply in an EU emissions trading system (ETS) oversupplied by 2.1bn carbon permits by the end of 2013.

Support for the reserve has grown among countries and the European Parliament, with talks now drilling down into technical details.

Dutch environment minister Wilma Mansveld wants technical tweaks to the reserve proposal, with Amsterdam seeking a higher uptake of EU emissions allowances (EUAs) into the reserve when there is oversupply.

The European Commission proposed that annually 12% of allowances in circulation should be placed into the reserve when the EU ETS is oversupplied more than 833m carbon permits.

Amsterdam previously supported this ( see EDCM 7 October 2014 ), but Mansveld now wants more than 12% of allowances to go into the reserve – although did not specify a figure.

The Danish government wants tighter reserve thresholds to speed up transfer of allowances into the reserve. But many countries are yet to come forward with a position on conditions for inserting into and removing allowances from the reserve.

“Many delegations reserve their final position on the issue pending further analysis,” a document dated 5 December from the Council of the European Union, which represents countries’ governments, said.

The Dutch government would like the reaction of the reserve to be based on data which is only a year old, not two years old as proposed by the commission.

A “large number of delegations” also back a reduction in the reserve reaction time, according to the Council of the European Union.

Amsterdam previously said it supports a start date of 2019-2020 for the reserve, earlier than 2021 put forward by the commission.

The Dutch government also wants to make a case for free EUA handouts to use a system known as ‘dynamic allocation’, which is based on more recent production levels and realistic benchmarks. Ben Lee