European changes to smooth carbon market reform

The changing political landscape in European Parliament and Commission could have significant influence on carbon market policy-making, according to Thomson Reuters Point Carbon.

European elections

Following the European elections in May, 2014 will see important changes in the three key institutions shaping carbon and energy related policy processes: the European Commission, the Parliament and the Council.

Jean-Claude Juncker was elected Commission president, and the new Commissioners will be selected over summer.

Hæge Fjellheim, Senior Policy Analyst – Point Carbon, stated: “While the choice of Commissioners will impact the broader energy and climate policy-making, the changes to the majorities and key positions in the European Parliament will have an imminent impact on the development of the Market Stability Reserve (MSR) process.”

Shifting majorities

The far right and Eurosceptic parties gained seats during the European elections in May, while the large centric parties lost seats compared to the 2009-2014 Parliament. The shifting majorities caused the largest factions in the Parliament to join forces to isolate the extreme right and Eurosceptic positions through an agreement of cooperation.

Changed policy orientation

Fjellheim added: “The changed composition of the new Parliament might not be reflected in changed policy orientation. On the contrary, it might even lead to more robust majorities as the Conservatives and Socialists will likely feel a stronger pressure to compromise.”

Fjellheim concluded: “The changes to the European Parliament are far more important for the imminent issues regarding changes to the EU ETS regulatory framework than personnel changes in other institutions. The single most important issue perpetuating the European carbon market is the Commission’s legal proposal for a Market Stability Reserve, a mechanism that would impact carbon prices until 2030 and beyond.”

Negotiations?

The newly elected chair of the Parliament’s Committee on the Environment, Public Health and Food Safety (ENVI), Giovanni La Via from the European people’s Party, is an experienced Parliamentarian but new to the ENVI committee. He rejected backloading last year in line with the EPP party line. However, the chair is supposed to be neutral with regards to committee matters. He will play an important role in negotiations with other committees and during negotiations with the Council.

Marcus Ferdinand, Head of EU Carbon Analysis, stated: ”Should the MSR file advance to trilogue stage already this autumn, La Via’s counterpart on the Council side would be representatives from the Italian Presidency. Given that La Via is member of the Nuovo Centrodestra party which is part of the current Italian government, this constellation could certainly facilitate discussions with the Italian to advance the Market Stability Reserve file.

“Both, the general intention to co-operate amongst the large factions in the Parliament and the way how key positions have been distributed within the Parliament’s Environment committee could facilitate the upcoming Market Stability Reserve debate. This is supported by the nomination of Ivo Belet as rapporteur in ENVI for the market Stability file.”

Ambitious energy framework

Belet, a Belgian Conservative, with a track record of supporting both backloading and an ambitious 2030 climate and energy framework was nominated to lead the file through the legislative process. Previously sitting in the ITRE committee, Belet is knowledgeable on energy and climate topics. This could lead to a draft report being tabled quite quickly after the summer recess in autumn.

Adapted from press release by Katie Woodward

Read the article online at: https://www.worldcoal.com/coal/17072014/european_elections_and_the_carbon_market_reform_1094/