BRUSSELS: The European Parliament's lead lawmaker on reforms to the EU carbon market wants to make it easier for policymakers to intervene if prices rise too fast in the existing market and in a planned second scheme for transport and heating fuels.
European Union policymakers are preparing to negotiate a major overhaul of the bloc's carbon market, its core policy tool for curbing emissions. The EU emissions trading system (ETS) requires power plants and industry to buy permits to cover each tonne of CO2 they emit.
The price of those permits soared by around 150% last year and leapt to fresh record highs of 98.49 euros per tonne of CO2 this week.
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The benchmark carbon price ended Friday at 92.68 euros per tonne.
EU lawmaker Peter Liese said he would propose an amendment to the EU's current rules for responding to price spikes.
"We have an unprecedented rise of prices, but it's still not triggered. And that's why one should discuss a streamlined proposal," Liese told Reuters.
Higher CO2 prices are seen as a crucial incentive for companies to invest in the green technologies needed for the EU to meet a goal of cutting emissions 55% by 2030, from 1990 levels.
Carbon prices have risen rapidly over the last year as EU policymakers unveiled more ambitious emissions policies, and as high gas prices in recent months prompted some power generators to shift to coal, which emits more CO2, driving demand for permits.
Some EU countries say financial speculators have pushed up prices, and have urged Brussels to intervene.
Article 29a of the rules allows countries to add extra permits to the market if the CO2 permit price is, for at least six months, more than three times the average price in the two preceding years, and if policymakers conclude this does not reflect market fundamentals.
The article has never been used. Analysts say the price has not reached levels that would trigger it.
Liese said he was considering a "copy paste" of the lower bar for intervention that the European Commission proposed for a second carbon market the EU plans to launch in 2026 for buildings and road transport.
Those rules say if for more than three consecutive months, the average price is more than twice the average in the six preceding months, the Commission will release 50 million permits from a reserve of spare supply.
Liese said he was considering two options for increasing supply in the existing market - bringing forward future permit auctions, or injecting extra permits from the reserve.
He said a more ambitious price regulation mechanism could also be considered for the new market, without providing details.
The amendments will be published after Feb. 16. EU lawmakers will debate and vote on their final position in June, before Parliament and EU countries negotiate the final law.