Industry committee 'silenced' itself on EU carbon rules

An “unusual” thing happened on Thursday morning (22 January) in room 4Q2 in the European Parliament's Jozsef Antall building in Brussels.

The industry and energy committee voted to ditch its own report, which would have presented the committee's opinion on an EU plan to fix the bloc's emission trading scheme (ETS).

Scottish MEP Ian Duncan i, a member of the Conservative party, was one of the committee members in the room.

Duncan talked to EUbserver some hours after the vote and described the atmosphere.

“There was a lot of uncertainty”, he said.

“Nobody could predict exactly where the different groups, the delegations within the committee, were actually going to go. That's unusual".

The subject of the committee's votes was a draft report by Italian centre-right MEP Antonio Tajani i about a proposal to create a market mechanism which would take out the current surplus of emission allowances.

“The carbon price is around about five euros", said Duncan.

"That doesn't work. It effectively means that the ETS is not functioning as it was set up to function: to incentivise innovation and to incentivise fundamental changes in how we generate energy”.

In the original proposal, published by the European Commission a year ago, it was suggested that the so-called market stability reserve (MSR) would start in 2021.

However, a number of the industry committee members, including Duncan, wanted an earlier start and proposed 2017.

“The ETS doesn't work. If we want it to begin to work, we need to reform. Why postpone that reform for what would be half a decade, when we could begin that reform now?”, he noted.

Where an MEP stood on the fault lines for 2017 versus 2021 was partly determined by his or her nationality, Duncan said.

The political group he belongs to, the centre-right ECR, is one of the groups split on national lines.

The two largest national parties that sit in the ECR are the Conservatives and the Polish Law and Justice party. The Conservative party of UK prime minister David Cameron i has come out in favour of a 2017 date, while in Poland both the governing party and the oppositional Law and Justice are against an earlier start.

“If you look at the situation in Poland, it's perfectly understandable if you get generate 80 percent of your electricity from coal, that you are going to be more disproportionately affected by this, than in the UK, where that figure is below 20 percent”, said Duncan.

An expected consequence of a higher carbon price is a price hike in consumer electricity prices in coal-dependent countries like Poland.

“I can understand why any politician, considering the impact of this particular proposal on the domestic political arena, would be uneasy if they felt the main consequence would be every electricity consumer in the country would pay more money. You can see immediately why their domestic political agenda, in an election year, may well be a sharpener of minds", Duncan added.

In the end, not enough deputies on Thursday agreed with him.

With a two vote margin, the proposal for a 2017 start was struck down.

Following the vote, a narrow majority in the committee - known by its acronym Itre - decided that it would be better to have no opinion at all, rather than an opinion that proposed 2021.

“The Itre committee is now silenced. … That gives a greater freedom, one might argue, to the Envi committee”, said Duncan, referring to the parliament's environment committee, which has the lead on the dossier.

“What we witnessed today inside the Itre committee, I do not think will be repeated inside the Envi committee, because the members there have quite a different approach … The members on the industry committee are a perhaps a little bit more industry-minded, whilst those members on the environment committee are more environmentally-minded".

The situation could mean that, while the 2017 date was rejected by the industry committee, an early date will end up being adopted.

“One might argue that, I would agree. … I feel that a common position is now moving toward 2017", Duncan said.

Once the European Parliament has decided its preferred start date for the MSR, it will have to find agreement with the ministers of the EU's member states.

The environment committee will decide whether to give one of their own the mandate to negotiate with the ministers, or whether to first ask the entire parliament's opinion in a plenary session.

Duncan is in favour of the latter option, arguing that a start date mandated by the entire plenary would give the parliament negotiator a stronger position.

However, a source with knowledge of the member states' position told this website that there is a “blocking minority” opposed to an earlier date.

Duncan noted that this could lead to opponents of the MSR to employ delaying tactics.

“If parliament wants … 2017, and [a group of member states form] a blocking minority, then you've literally got no recipe for progress at all. The reality may well be that those who'd wish to delay the start date might well win".

The environment committee will vote on the market stability reserve in February.