Update: Two largest EU political groups reach carbon reform compromise

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

According to the first source, who asked to remain anonymous, the Socialists & Democrats (S&D) group shadow rapporteur Matthias Groote said that the parties’ lawmakers in the environment committee (ENVI) of the European Parliament “should be able” to support a slightly revised compromise proposed by the European People’s Party (EPP) on Monday.

A second source at the office of the Greens’ shadow rapporteur Bas Eickhout said that S&D had been “very close” to finding a compromise with the political groups who favour a more ambitious design for the reform, but in the end it didn’t materialise and S&D sided with the EPP.

Both sources are familiar with Groote’s position. Groote’s office, however, did not respond to ICIS’ requests for comment on the matter.

A third source at the office of an S&D lawmaker and ENVI member said that a party meeting later on Tuesday night will provide more clarity on whether the compromise has the backing of the full group. He said that some “controversial points” in the new text still remain.

Smaller groups

The Alliance of Liberals and Democrats for Europe (ALDE) also supports the text, the two sources said. ALDE shadow rapporteur didn’t reply to a request for comment.

The European Conservatives and Reformists Group (ECR) are also on board, said one of the sources, but the group did not reply to a request for comment.

Opposition remains from the Europe of Freedom and Direct Democracy Group (EFDD) and the Group of the European United Left/Nordic Green Left (GUE/NGL), sources said.

Shadow rapporteurs were given until 14:00 CET on Monday to state if their groups supported an updated compromise proposal by the EPP’s Ivo Belet, the ENVI rapporteur on the reform.

The committee will vote on Tuesday to send its recommendation to the Parliament, one of the two EU bodies that has to approve reforming the carbon market by introducing a stability reserve in order to turn it into law. The other is the European Council.

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

Slight changes

The compromise text, seen by ICIS, still includes a controversial paragraph about the reform start date featured in a previous Belet’s proposal (see EDCM 12 February 2015). 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 observers thought might leave space for the auction calendar to be adjusted in 2018 already.

Compared to the previous proposed compromise, the new text also makes 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. Silvia Molteni