Major EU parties move closer to ETS deal

The European Parliament's two biggest parties are close to a compromise on post-2020 reform of the EU emissions trading scheme (EU ETS), although a deal has not yet been agreed.

Political parties today continued negotiations on the rules of phase 4 (2021-30) of the EU ETS after a meeting of parties' head negotiators or shadow rapporteurs yesterday evening failed to deliver any progress.

By early evening today, rapporteur Ian Duncan indicated that political groups were moving closer to a compromise. "Serious movement on ETS. Well done shadows! Nearly there," he tweeted.

A consensus could still be reached as late as tomorrow evening, ahead of an environment committee vote on the proposal scheduled for Thursday, 15 December. But the possibility remains that the vote, which has been postponed once already, could be delayed again.

The main sticking point is still the linear reduction factor (LRF) — the annual rate at which the allowance quota is reduced — which seems to be a red line issue for both parties, according to the International Emissions Trading Association (Ieta). The S&amp;D party group is pushing for it to be increased to 2.4pc while the EPP group favours the 2.2pc originally tabled.

Other key issues — an amount of allowances to be cancelled at the outset, auctioned versus free allowances and the market stability reserve (MSR)'s initial allowance removal rate — still remain under contention.

But Ieta's head of EU policy, Stefano De Clara, is one of many observers who believe that wider political dynamics have stifled progress on EU ETS reform. "Given how close the two parties' positions are indicates that a bigger power play between the EPP and the S&amp;D is at work. It really is a matter of just tweaking some technical details," De Clara said.

At issue is a dispute between the European People's Party (EPP) and the Socialists and Democrats (S&amp;Ds) over who should be the European Parliament's next president.

The EPP and the S&amp;D until recently had an informal agreement under which a member from each party would alternately serve as president. But the S&amp;D recently put forward its group president, Italian MEP Gianni Pittella, as the next candidate to replace incumbent Martin Schulz, who is also an S&amp;D member.

Pitella said today that the collaboration with the EPP is over, which is an indication that nearly 10 days into this crisis, the situation between the two groups have not calmed down at all, according to De Clara.

"Of course, EU ETS reform is not the parties' main concern. It has just become trapped in this political game over the parliament presidency," he added.

Whether the difficult EU ETS reform talks set a precedent for future negotiations on other legislative proposals depends on how the crisis between the two groups evolves.

"If they find a compromise on how to share the presidency, it will smooth a way forward. But if their relationship remains fractious, then any future negotiations will be as difficult as these on EU ETS reform have been," De Clara said.

Once the new president is elected, at least the battle over the presidency will end and parties will know if they are negotiating with an ally or an opponent, he pointed out. "But at the moment, there is a high degree of uncertainty, so no-one wants to pre-judge the outcome," De Clara said.

The EPP was to propose its candidate for the presidency today, while the other political groups have already done so. The new EP president will be elected during the parliament's plenary session on 17 January.

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