* Risk national plans replace EU policy if CO2 market
* Heavy industry opposes rescue plan
* Supporters say strong ETS needed as investment signal
By Barbara Lewis
BRUSSELS, Jan 22 The European Union's Emissions
Trading Scheme will collapse and give way to "a patchwork" of
national plans unless the bloc can agree to an emergency rescue
plan, the EU climate chief said late on Tuesday.
The value of allowances on the EU ETS dived to an all-time
low below 5 euros ($6.64) a tonne on Monday before
recovering slightly on Tuesday.
The sell-off has been linked to a huge surplus of permits
generated by recession and to the failure so far of member
states to back a Commission proposal to tackle the glut.
"If you get a very low carbon price, or maybe no carbon
price, then the alternative is a patchwork of 27 different
systems. We risk having a nationalising of energy and climate
policies," Climate Commissioner Connie Hedegaard told a Brussels
"They are toying with something very, very dangerous," she
added of those among the 27 EU nations and within industry
opposed to the Commission's rescue plan.
A meeting of representatives of member states on Wednesday
will continue debate on the proposal known as backloading, which
involves withdrawing temporarily some of the surplus permits for
2013-15 and adding them back to the market in 2019-20.
The meeting is not expected to progress as far as a vote,
since dominant EU member Germany has yet to take an official
Germany's reluctance reflects divisions between, on the one
hand, the environment ministry and renewable industry, and on
the other, the economy ministry and heavy industry lobby, which
is nervous about anything that could drive up the price of
Coal-dependent Poland has resolutely opposed the backloading
proposal, saying the weakness of the ETS reflects economic
malaise and there is no justification for market intervention.
The European Parliament will take up the debate on Thursday.
Matthias Groote, chairman of the European Parliament's
environment committee, who is steering debate on the proposal,
said he was working to achieve a compromise.
He raised the idea of reviewing a "carbon leakage" list
covering industries that argue they risk being driven out of
Europe by the ETS.
The industries qualify for aid to compensate for the cost of
"Probably, we have to check it again - in both directions,"
Groote said, referring to the possibility of removing industries
from the list as well as adding them.
Commission officials have said that unless the emergency
measure of backloading is passed, there is virtually no chance
before the end of the current Commission's term in 2014 of
mustering the political will for the deeper structural reforms
the market really needs.
Eurelectric, which represents the European electricity
industry, has said it supports backloading, while the
energy-intensive aluminium and chemical industries have opposed
Royal Dutch Shell, keen for a stronger carbon price
to justify carbon capture and storage and shift the economic
balance away from coal burning towards cleaner gas, has also
supported the Commission's plan.
"The solution is a robust carbon price delivered through a
strong ETS," David Hone, senior climate change adviser at Shell
, said. "We need to do this to avoid fragmentation of
energy policy because fragmentation will lead to even higher