Feb. 11 (Bloomberg) -- An emergency plan to prop up prices in the European Union’s carbon market, the world’s biggest, will probably start in the middle of next month, the European Commission said today.
The commission, the 28-nation bloc’s executive arm, has already started preparatory work with member states and carbon- permit auction platforms, according to a statement published on its website. The market fix envisages delaying, or backloading, the sale of 900 million carbon permits to help prices rebound from levels that the EU says are too low to stimulate investment in low-emission technologies.
“The auction platforms will publish the revised auction calendars in advance of the start of backloading,” the commission said. “At this stage of the preparations, the commission expects that backloading will be implemented as of mid-March.”
The emergency regulation for the carbon market will be adopted after member states end scrutiny of the measure in a decision scheduled for Feb. 24. The fix ties the volumes to be postponed this year to the starting date of the supply curbs, with 400 million allowances to be withheld if backloading begins in the first quarter and 300 million if it starts in the second.
The cost of discharging a metric ton of carbon dioxide plunged about 80 percent since 2008 amid a glut of allowances that was worsened by the economic slump. EU permits for December fell 2.5 percent to 6.33 euros ($8.64) a ton by the close on the ICE Futures Europe exchange in London today. ICE and the European Energy Exchange are two platforms for government auctions of emission allowances.
Member states gave initial approval for the backloading plan on Jan. 8, and the measure is now awaiting final sign-off by ministers after the European Parliament agreed last week to shorten its obligatory evaluation of the measure. Following the scrutiny, the commission will need about three weeks to formally adopt the regulation and notify market participants of the new auction calendar, according to EU rules.
--Editors: Dan Weeks, Sharon Lindores