The International Emissions Trading Association (IETA) urges MEPs to support amendments that provide greater legal clarity for modifying the timing of the auction of allowances, February 18

To the attention of MEPs in the European Parliament’s Environment Committee

18 February 2013
The International Emissions Trading Association (IETA) urges MEPs to support amendments that provide greater legal clarity for modifying the timing of the auction of allowances

Dear Honorable Member of the European Parliament,

Tomorrow, you will vote on a draft decision that amends Article 10.4 of the ETS Directive. The proposal seeks to provide legal clarification on the European Commission’s mandate to propose amendments to the timing of auction of allowances.

The International Emissions Trading Association, which represents over 150 companies active in the global carbon market, strongly encourages the ENVI Committee to support amendments that seek to clarify the scope of the Commission’s proposal, by limiting the mandate to a one-off intervention, and to reject those amendments that would delete the Commission’s legal clarification for back-loading.

REJECT: amendments 8, 9, ITRE, 10, 29, 12, 17, 23
SUPPORT: consolidated amendments 1 and 2
SUPPORT: the start of trilogue negotiations in view of reaching a first-reading agreement

Here are the main reasons why the proposal should be supported:
•    Back-loading does not change the EU ETS overall cap. Market fundamentals remain as agreed in the 20-20-20 package. Any changes in legislation, which would impact market fundamentals, would need to be undertaken in the context of the structural reform of the EU ETS.
•    Previously, in face of legitimate expectations that there would not be enough liquidity in the transition from Phase 2 to Phase 3, the EU decided to front-load auctions. Now as the situation is precisely the opposite, the EU should have the possibility to temporarily address this over-liquidity situation by back-loading the auction of allowances
•    Current low carbon prices reflect a strong imbalance between supply and demand that will challenge market confidence in the EU ETS until structural reforms have been agreed. If not readdressed in the short-term, the EU ETS risks becoming an irrelevant policy instrument. Alternatives to a European-wide well-functioning Emissions Trading Scheme risk leading to a patchwork of 27 national policies, which would be more costly, and create a difficult operating environment for market operators and investors across Europe. A positive vote tomorrow would provide an opportunity for EU policy makers to then debate and decide on structural reforms that would address the EU ETS design flaws.

Even with its current challenges, the EU ETS is one of the most successful climate policy instruments in the world.  It has enabled the reduction of greenhouse gas emissions in a cost-effective and technology-neutral way. It has paved a way that others are following: China, Australia, California, and over 15 developing countries have already established carbon markets or are exploring the means to do so. Europe must continue to work to improve its carbon market as an example for others to follow.

Your vote is extremely important. Voting against amendments aiming to provide greater legal clarity would see further policy reform options irremediably lost. Supporting them would send a very important signal that the EU ETS can and should remain the central pillar of the EU’s climate policy, which promotes both environmental reductions and economic growth.

IETA and its +150 corporate members look forward to a discussion on the future of the EU ETS with the European Parliament and hope that the ENVI Committee will consider voting in favour of amendments that improve the Commission’s proposal and allow a longer term debate on the future architecture of the EU ETS to take place.

Should you have any questions on IETA’s position, please don’t hesitate to contact Ms. Sarah Deblock, European Policy Director:, +32 2 230 1160.


Dirk Forrister
President and CEO, IETA

IETA has been the leading voice of the business community on the subject of carbon markets since 2000. IETA's +150 member companies include some of the world's leading corporations, including global leaders in oil, electricity, cement, aluminum, chemical, paper, and other industrial sectors; as well as leading firms in the data verification and certification, brokering and trading, legal, finance, and consulting industries.

Download the letter here

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