Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

EU CO2 reform should shift beyond 2020  Join our daily free Newsletter

MENAFN - Arab News - 19/11/2012

No. of Ratings : 0
Add to Mixx!


 


(MENAFN - Arab News) After a renewed crisis, the European Union is embarking on a marathon reform of its carbon market for rather small gains, and may find more success by focusing on its next trading cycle after 2020.

The market, which has all but collapsed for the second time in its brief existence, accounts for half the bloc's greenhouse gas emissions and is the main tool for meeting climate change targets.

To fix the problem, in the wake of the worst recession in half a century and an enduring euro zone crisis the EU executive, the European Commission, is trying to boost carbon prices.

That would add up to a rise in power prices too - currently a popular bugbear across the EU, in sharp contrast to the United States, where prices are plunging thanks to a boom in unpolitically correct shale gas production.
The Commission worries that if it does nothing, prices will otherwise likely to fall to near zero, given a glut of EU allowances (EUAs) expected to grow to the equivalent of one year's emissions under the scheme.
It detailed this week two steps for reform.

The first, relatively simple measure is to delay the sale of EUAs, briefly halving the surplus, and makes sense although it is not guaranteed member state approval.

It announced on Wednesday options for a second step of deeper, structural reforms which would take longer and face stiffer opposition, and included canceling allowances permanently.

If successful, the reforms may achieve a modest revival in carbon prices to around 12-15 euros. That would prevent the market stalling altogether but fail to drive significant emissions cuts given a sharp fall in coal prices, now too cheap for cleaner-burning gas to compete.
The Commission, however, strangely missed any reference to an overhaul of the market's next trading cycle, from 2021-2030, including a 2030 emissions target.

Such a target would avoid short-term hiatus from attempted reforms opposed at least by Poland; fits with an international schedule of climate negotiations; will have to be addressed anyway, preferably sooner than later; could address deeper reforms including a floor price; and would equally impact prices before 2020 as a result of forward hedging by utilities.
The case for nearer term reform is undermined by a euro zone crisis which has already driven deep cuts in emissions and which makes the prospect of a small hike in power prices, as a result of higher carbon prices, less palatable.

Reform process
The Commission is taking a two-step approach because it views the first as less controversial and legally simpler, meaning it can get the process underway.

That first step, announced on Monday, is a draft amendment to the EU ETS Auctioning Regulation which would delay the auction of some 900 million EU allowances (EUAs) to 2019-20, originally due in 2013-15.

There are complications: Some member states have not given explicit backing pending clarity on plans for a deeper overhaul, as the Commission said in its "Impact Assessment" on Monday:

"Member States seem to agree factually with the Commission's analysis showing a rapid build-up of the surplus. Opinions on if and how this should be addressed are not conclusive."

Amendment of the regulation requires approval by a Climate Change Committee (CCC) of member state experts at a meeting on Dec 13 or thereabouts plus a three-month scrutiny period.

The Commission is also seeking a "mini-amendment" of the emissions trading Directive, requiring a full parliament vote probably in April.

The CCC vote needs a qualified majority vote, a technical EU term which refers to the different voting powers held by different member states.
Poland has said it is opposed and has 27 votes; it needs to muster another 64 to block progress at this first hurdle.

The parliament vote requires a simple majority.
Step two

The back-loading proposal does not affect the overall volume of allowances to be auctioned in phase three of the market, from 2013-2020, only their distribution over the eight-year period.

On Wednesday, the Commission announced options for the second leg of its reform.

Options included: canceling surplus EUAs; a tougher EU-wide carbon emissions target in 2020; steeper annual emissions reductions in the carbon market; limits on imports of carbon offsets; and a price floor.
The proposals need analysis and will require intensive canvassing of member states, followed by detailed draft amendments to existing law, and finally a decision process which will take two years or more.
2030 Target

The Commission is only considering reforms before 2020.
But it already has a mandate to review the ambition of its carbon market in the 2020s, through annual reductions called the "linear factor".

As the emissions trading directive says: "The Commission shall review the linear factor and submit a proposal, where appropriate, to the European Parliament and to the Council as from 2020, with a view to the adoption of a decision by 2025."

An Impact Assessment accompanying the Commission's "Energy Roadmap", published last December, has already suggested a 2030 target which can provide an emissions trajectory:

"In 2030, energy-related CO2 emissions are between 38-41 percent lower (than 1990 levels), and total GHG (greenhouse gas) emissions reductions are lower by 40-41 percent," it said.

Agreement on such a target fits with an international schedule where the EU must decide a negotiating position for the climax of UN talks on a new global climate deal in 2015.

And it could impact prices before 2020 as a result of utility hedging where power generators sell electricity and hedge their carbon emissions up to three years ahead.

While the Commission's proposals would prevent its flagship carbon market from stalling altogether, it could alternatively focus on a longer term overhaul, which may fit better with its existing mandate and so require less brinkmanship, and avoid a focus which raises power prices and emissions cuts now, neither a near-term priority.

- Gerard Wynn is a Reuters market analyst. The views expressed are his own.

 






  MENA News Headlines
Apr 24 2014Qatar- HH Sheikha Moza Meets Mayor of Kobe Visits RIKEN Research Institution ,Qatar News Agency
(MENAFN - Qatar News Agency) Kobe April 24 - Her Highness Sheikha Moza bint Nasser Chairperson of Qatar Foundation for Education Science and Community Development (QF) today held a meeting with the ...

Apr 24 2014Qatar- Sidra-BMC Event Boosts Biomedical Research Publishing ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - A symposium organised jointly by Sidra Medical Research Centre and BioMed Central (BMC) mulled trends in research and on open access publishing here ...

Apr 24 2014Qatar- Mannai Corp Q1 Net Profit up 73% to QR 150.1 Million ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Exchange listed Mannai Corporation (QE: MCCS) net profit is up 73% to QR 150.1 Million for the first quarter of fiscal year 2014 ending March 31 ...

Apr 24 2014Bahraini firms forecasted to grow 10 pct ,MENAFN
(MENAFN) In a report based on a study of over 650 companies across GCC, Kuwait Financial Centre (Markaz) forecasts a growth of the Bahraini companies' earnings by 10 percent in 2014, Gulf Daily News ...

Apr 24 2014Israeli Army Storms Deir Samit Village West of Hebron ,Qatar News Agency
(MENAFN - Qatar News Agency) bron April 24 - Israeli army forces stormed at dawn Thursday Deir Samit village southwest of Hebron city in the West Bank. The Israeli forces conducted raid and search ...

Apr 24 2014Qatar Airways to add more seats on Doha-Vienna route ,MENAFN
(MENAFN) Qatar Airways plans to offer more 1.700 seats on its Doha-Vienna route beginning from September 2014, according to Gulf News. The company aims to expand the growing passenger demand from ...

Apr 24 2014Qatar- QFC Authority Five-a-Side Football Tournament Kicks Off ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Financial Centre (QFC) Authority's first Five-a-side Football Tournament is displaying dribbling skills of executives from Doha's financial ...

Apr 24 2014Qatar Stock Exchange Down 0.05% ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - The Qatar Exchange ended in the red area when trading closed Thursday at 12954.93 points (0.05%) down 6.63 points from the previous closing of 12961.56 ...

Apr 24 2014Afghan Guard Shoots Dead 3 Foreigners in Hospital ,Qatar News Agency
(MENAFN - Qatar News Agency) Kabul April 24 - Three foreigners including a doctor were shot dead and their colleague wounded when a guard of a private Cure Hospital opened fire on them in the ...

Apr 24 2014Uruguay Public Health Minister Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Montevideo April 24 -Minister of Public Health in Uruguay Maria Susana Mu?iz met here on Thursday with HE qatari ambassador to the republic of Uruguay mohamed hassan ...

Apr 24 2014Georgian Justice Minister Leaves Doha ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - HE Minister of Justice of Georgia Tia Tsulukiana left Doha on Thursday morning wrapping up a two-day official visit to the country. An agreement on ...

Apr 24 2014King bids to reassure Saudis as MERS deaths hit 85 ,AFP
(MENAFN - AFP) King Abdullah was in the Saudi commercial hub of Jeddah on Thursday in a bid to reassure a worried public as the death toll from the MERS virus hit 85. The Red Sea city has seen a ...

Apr 24 2014Israeli Tanks Enter Gaza Border area ,Qatar News Agency
(MENAFN - Qatar News Agency) Gaza April 24 - Six Israeli military tanks on Thursday entered a border area in the southern Gaza Strip witnesses said. The tanks crossed into Gaza in an area called ...

Apr 24 2014QBA strengthens economic ties with Kenya ,MENAFN
(MENAFN) Members of the elite Qatar Businessmen's Association (QBA) stated their willingness to cooperate with their Kenyan peers, strengthening economic ties between Qatar and Kenya, The Peninsula ...

Apr 24 2014Russian Lebanese Foreign Ministers to Discuss Situation ,Qatar News Agency
(MENAFN - Qatar News Agency) scow April 24 - Russian Foreign Minister Sergei Lavrov and his Lebanese counterpart Gebran Bassil will discuss bilateral relations at a meeting in Moscow on Thursday as ...

Apr 24 2014Kuwait inflation edges up 2.96% y/y in March ,Arab Times
(MENAFN - Arab Times) Wait city april 23 (kuna): kuwait's annual record of the general index of consumer prices (inflation) rose in march by 2.96 percent compared with the same month of last year ...

Apr 24 2014GLOBAL MARKETS SEESAW ON UKRAINE ,MENAFN Press
(MENAFN Press) The events in Ukraine have had a limited impact on MENA markets. Despite the Dubai index sliding 1.5%, trading volumes remained healthy. Quarterly corporate earnings results released ...

Apr 24 2014Careers UAE pushes for womens empowerment ,MENAFN Press
(MENAFN Press) Recognising the increasingly important role of UAE National women in the country's developmental march, Careers UAE 2014 offered an ideal platform to empower working women with a key ...

Apr 24 2014Egyptian Premier Off to Chad ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egyptian Prime Minister Ibrahim Mehlib left cairo on Thursday for Chad the first leg of a three-day two-state trip that will also take him to Tanzania ...

Apr 24 2014Saudi government to invest in medical project ,MENAFN
(MENAFN) A cooperation agreement between China International Development and Investment Corporation Limited (CIDIC) and Saudi developer Trans Sadara Company has been established to form Lana medical ...

more...


 






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help