* Surplus of carbon credits has weakened market
* Carbon price has slid to 6 euros from highs above 30 euros
* European bill insufficient to fix system -Swedish minister
* Swedish proposals include five-year expiration for permits
BRUSSELS, Oct 17 Sweden has proposed measures to
strengthen carbon prices from 2020, the country's climate
minister told Reuters on Monday, seeking to soak up the glut of
credit in the EU Emissions Trading System (ETS).
A European bill to reform the ETS system to make big
polluters pay for emissions is being debated by EU lawmakers and
member states, but Sweden's climate minister Isabella Lovin has
presented new proposals to 13 EU environment ministers with the
aim of putting a ceiling on emmissions.
"The ETS system is not working now and we don't see that the
(European) Commission's proposal is sufficient in making sure
that the price signal is strengthened," Lovin said after a
meeting with the 13 ministers who call themselves the Green
Prices under the ETS scheme have plummeted to 6 euros
from highs above 30 euros in 2008 and are well below
the level companies say is needed to spur investment in
technology to cut emissions.
Lovin's proposals included a firming up of the Market
Stability Reserve (MSR) to remove some of the surplus
allowances, scrapping permits above a set ceiling and the
possible introduction of an expiration date to cancel surplus
permits after five years.
France has also announced plans for a carbon price mechanism
to help to fix the ETS, but other EU nations fear that tougher
pricing could push industry to relocate abroad.
While the Swedish proposals touch on a plan to tighten the
rate at which permits should be removed from the market from
2020-2030, Lovin said doing so is politically difficult.
The European Parliament's industry committee have backed
keeping what is known as the linear reduction factor at the 2.2
percent annual rate proposed by the Commission.
The chamber's Environment Committee, which has the main
responsibility for reforms, favours a faster pace of reduction
to take into account the goals of the Paris Agreement on climate
change, which was thrashed out by 195 nations last December.
It will vote on its amendment to the proposal in December.
Ian Duncan, who is shepherding the EU bill through the
European Parliament, said last week that he was considering
potential tweaks to the MSR, which would have a bullish effect
"I want to look at the market stability reserve again. I
want to look at it now. Take allowances out of it now," he told
the Carbon Pulse Carbon Forward conference.
In its drive for a more ambitious ETS, Sweden is also
pioneering a programme to purchase and then scrap 30 million
euros of carbon credits a year -- equating to about 10 percent
of its total emissions -- from 2018 to 2040.
"This is also a way for us to show our ambition and that we
are serious about this," Lovin said.
(Reporting by Alissa de Carbonnel; Additional reporting by
Susanna Twidale in London; Editing by David Goodman)