The European Commission (EC) has proposed to change the timing for auctions of emissions allowances as the market should not be “deliberately flooded”.
The news comes after the EU Council approved the UK’s bid to have it own national emissions auction platform earlier this month, with the auctions due to begin at the end of the year.
The EU Emissions Trading System (ETS) is the main mechanism by which the UK will meet its carbon reduction targets.
EU Commissioner Connie Hedegaard said: “The EU ETS has a growing surplus of allowances built up over the last few years. It is not wise to deliberately continue to flood a market that is already oversupplied. This is why the Commission today has paved the way for changing the timing of when allowances are auctioned. This short-term measure will improve the functioning of the market.”
The CBI, which represents thousands of firms in the UK, welcomed the news and suggested some auctions could be “backloaded”.
Dr Matthew Brown, CBI Head of Energy and Climate Change policy said: “Backloading emissions allowances can only be useful as part of a long-term plan. Businesses agree that emissions trading is the best way to encourage the investment needed to meet carbon targets. However, the EU ETS is currently out of step with Europe’s long-term climate goals, and investors urgently need to see emissions targets for 2030 and beyond.”
The decisions are expected to be made by early next year.