STRASBOURG (Reuters) - European lawmakers backed a long-awaited deal to reform the EU’s carbon market after 2020 on Tuesday and shore up prices in the bloc’s flagship tool for reducing greenhouse gas emissions from some 12,000 industrial and power installations.
The new rules for the EU’s Emissions Trading System (ETS) were agreed in November after months of negotiations among political groups and EU nations but still needed official approval by the European Parliament.
Of 678 voting members of parliament, 535 were in favor, with 104 against and 39 abstentions.
European carbon prices have risen some 15 percent since negotiators first struck the deal in November and were trading at around 8.90 euros per tonne after the vote, a price critics say is still too low.
The EU’s cap-and-trade system suffers from too many permits, rendering it inefficient. The reform deal seeks to strike a balance between being ambitious and avoiding energy-intensive industries moving abroad to avoid regulation.
It will double the rate at which the scheme’s Market Stability Reserve (MSR) soaks up excess allowances, as a short-term measure to beef up prices.
In 2023, a new mechanism to limit the validity of allowances in the MSR will be put in place.
The overall cap on the total volume of emissions, known as the linear reduction factor (LRF), will be reduced annually by 2.2 percent.
The European Union aims to cut greenhouse gas emissions by at least 40 percent by 2030, as part of the overall Paris Agreement to avoid the worst consequences of climate change.
Reporting by Robert-Jan Bartunek; editing by Philip Blenkinsop