According to German national firm Luther, Commission plans would break EU law. Brussels wants artificially to reduce the amount of the CO2 emissions allowances traded to increase the currently low CO2 price and to generate additional climate protection incentives, the so-called set-aside.
‘The plans of the EU Commission for a set-aside of CO2 allowances with the aim to increase the market prices violate the Emissions Trading Directive,’ maintained Stefan Altenschmidt, head of the Luther’s environment law practice group. ‘According to the directive, the Commission is not entitled to interfere with the market through the change of the auctioning regulation intended by it. Such interference would not be permitted under European law for lack of a competence base.’

Leading industries

The opinion was compiled by Luther for the alliance, which contains some of the leading European associations of the steel, cement, glass and paper industries.
Mr Altenschmidt’s opinion is based on Europe’s Emissions Trading Directive, which states that the Commission is not competent to interfere into the carbon market. It is neither entitled to a temporary reduction of the amount of the CO2 allowances to be auctioned, nor to a permanent reduction of the tradable CO2 budget.

Burden on businesses

Mr Altenschmidt added: ‘The Emissions Trading Directive only grants the EU Commission the right to interfere with the market in case of CO2 prices that are too high to reduce the burden on businesses. However, the directive does not allow the Commission to work towards a price increase in case of CO2 rates that are too low. According to the directive, the overall amount of emission allowances available in the market until 2020 is also already determined. This amount may only be reduced in case of a change of the Emissions Trading Directive. The political idea to use the auctioning regulation to stimulate a stronger carbon price signal is incompatible with applicable European law.’