BRUSSELS (Reuters) - The European Commission outlined a keenly-awaited plan on Wednesday to bolster the carbon Emissions Trading Scheme (ETS) by reducing a massive burden of surplus allowances.
To tackle the overhang of carbon allowances, the Commission, the EU’s executive arm, said it proposed altering the auction timetable to delay the release of new allowances.
It is also seeking clarification of an article governing the timetabling of auctions within the European Union’s ETS law.
While there are no firm numbers in that draft proposal itself, a Commission analysis assesses the possibility of withdrawing 400 million, 900 million or 1.2 billion allowances.
Environmental groups have made the case for around 2 billion or more.
“The EU ETS has a growing surplus of allowances built up over the last few years,” Climate Commissioner Connie Hedegaard said. “It is not wise to deliberately continue to flood a market that is already oversupplied.”
The Commission will present a report later this year on the ETS, to start a debate on deeper structural reforms to follow the short-term fix.
Member states will need to approve the Commission’s proposals before they can take effect.
Reporting by Barbara Lewis; editing by Rex Merrifield