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Europe: tighter carbon market regulation at risk

World Coal,

Europe has voted and the preliminary results show that the centrist parties see their share of seats in the European Parliament decreased in favour of the far right and eurosceptic parties which have substantially increased their representation in the new Parliament. Decisions in the field of energy and climate policy will be significantly influenced by the election results, according to Thomson Reuters Point Carbon, the leading provider of analysis and forecasting for the energy and environmental markets.

Hæge Fjellheim, Senior Policy Analyst at Thomson Reuters Point Carbon stated: “The composition of the new Parliament will have implications for the development of European policy for the rest of this decade, including on the further process of determining a 2030 climate and energy framework and reform of the EU Emissions Trading Scheme (ETS)”.

Marcus Ferdinand, Head of EU Carbon Analysis concluded: “With the increased share of eurosceptic Parliamentarians, the majority in favour of tighter energy and climate policy – as well as a more ambitious EU ETS – is likely to become more unstable. He added, “We expect the votes related to changes in the regulatory set-up of the European carbon market to be tighter with the new Parliament, which could lead to greater EUA price volatility in the future”.

A clearer picture of the new Parliament positions on ETS-related issues will evolve over time, according to Thomson Reuters Point Carbon. Committees will only start working on concrete issues, such as on the proposal for a Market Stability Reserve, in the autumn. Fjellheim states that “the new composition of the Parliament will also lead to a shift of responsibilities of high profile MEPs, with influential MEPs leaving carbon market related topics to lesser-known colleagues, opening the possibility for new coalitions and compromises.”

The election of the new Commission President, followed by the appointment of the new college of Commissioners, will steal the spotlight in the summer and beyond. Ferdinand concludes: “A delay in the appointment of the new Commission is likely to distract Parliamentarians from their day-to-day work. However, the impact for the ongoing discussions in the European institutions on the Market Stability Reserve is likely to be small as the debate is still in its infancy”.

Written by Thomson Reuters Point Carbon.

Edited by Katie Woodward

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