A proposed compromise date for the reform of the EU Emissions Trading System (ETS) at the end of 2018 is facing opposition from some legislators, according to EU sources. Members of the European Parliament will vote on the proposal next week in an attempt to address the surplus of allowances that has resulted in depressed prices. The suggested start date of December 31, 2018 falls between the European Commission's proposal of 2021 and the preferred start date of 2017 for some member states and politicians. An email seen by Reuters indicated that the social democrat alliance could not accept the December 31 date but might support a start date of January 1, 2018. The Greens and the ALDE liberal alliance also rejected the later date proposed by the main centre-right parliamentary group.
Analysts suggest that the difference of one year in the start date is unlikely to have a significant impact on the market, with a delay of one year equating to approximately one euro per tonne. The vote next week is not definitive and will need to be followed by a plenary parliamentary vote and endorsement by member states.
The issue of agreeing to carbon market reform is contentious, as energy-intensive industries argue that it will increase costs and potentially drive industry out of Europe. However, other sections of industry and utilities, including E.ON and Iberdrola, argue that early reform is crucial to incentivize investment in renewable energy.
