Merkel Signals Support for ETS “Backloading” Proposal

Newly re-elected German Chancellor Angela Merkel voiced her support last week for a proposal that would temporarily delay the auctioning of 900 million carbon permits in the EU’s Emissions Trading System (EU ETS). The practice, known as “backloading,” aims to reduce the glut of unsold carbon allowances in the scheme, which has helped drive prices to dangerous lows and sparked questions over the ETS’ long-term viability.

Under EU rules, changes in legislation must have the approval of the European Commission- which proposed the “backloading” measure - as well as the European Parliament and EU member states. While the European Parliament approved the proposal earlier this year, Germany had been undecided on its position, reportedly leaving EU member states deadlocked.

The chancellor’s previous government had been divided on the subject, with her coalition partner- the junior Free Democrats - opposing the measure. The makeup of the new coalition, some suggest, could be more open to the policy change.