Two largest EU political groups reach carbon reform compromise

The two largest EU political groups on Monday have agreed on a carbon market reform compromise ahead of a key vote on Tuesday, one source closely involved in the debate told ICIS on Monday.

According to the source, who is familiar with the position of the Socialists & Democrats (S&D) group shadow rapporteur, Matthias Groote, the parties’ lawmakers in the environment committee (ENVI) of the European Parliament “should be able” to support a slightly revised compromise proposal by the European People’s Party (EPP) in a vote on 24 February. The vote will serve as recommendation to the plenary, one of the two EU bodies that has to approve the reform in order to turn it into law.

Groote’s office did not respond to ICIS’ requests for comment on the matter.

The Alliance of Liberals and Democrats for Europe (ALDE) and the European Conservatives and Reformists Group (ECR) also support the compromise, the source said.

If every lawmaker votes along the party lines on Tuesday, the compromise will be supported by 51 out of 69 lawmakers in the ENVI.

The text, seen by ICIS, still includes a controversial paragraph about the reform start date included in a previous compromise proposed by the ENVI rapporteur on the reform, the EPP’s Ivo Belet. The paragraph states that the reserve should be established in 2018 and is operational by 31 December 2018. However, new language is included stating that EU allowances (EUAs) should be placed in the reserve when a certain surplus threshold is hit “without undue delay”, which some observes thought might leave space for the auction calendar to be adjusted in 2018 already.

Compared to the previous proposed compromise, the new text also make longer the period in which 300m EUAs should be sold to finance an innovation fund, with the deadline now being 2025 as opposed to 2020. According to the compromise the fund will be fed with unallocated allowances previously earmarked for free allocation, rather than back-loaded allowances as previously proposed.

All 900m back-loaded EUAs would go directly into the reserve.

The Greens, the Group of the European United Left/Nordic Green Left (GUE/NGL) and the Europe of Freedom and Direct Democracy Group (EFDD) are opposed to the compromise, the source said.

It was not possible to obtain direct confirmation from group representatives before time of publication. Silvia Molteni