Isra-Mart srl: European Commission resolves CO2 market stand-off

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The European Commission (EC) has ended and internal dispute over new energy regulations that had threatened to undermine the EU carbon market, according to an EU source.

The EC’s energy department showed that the upcoming energy efficiency directive might impact negatively on the EU Emissions Trading Scheme (ETS) and therefore, blunt its main tool to curb emissions.

The analysis, which laid at the base of the energy department’s disagreement with the climate department (which oversees the ETS), showed that the energy efficiency regulation was expected to be so effective in cutting carbon emissions that it would reduce demand for emissions permits. As a result, the carbon price would be falling between EUR0-14/t in 2020 from the business-as-usual price of EUR25.

The EC has agreed to monitor the impact on the ETS and to ensure it continues to reward low-carbon investments.