Germany's Merkel faces some internal opposition to CO2 backloading

Reuters News
Posted: Oct 31, 2013 7:38 AM
Germany's Merkel faces some internal opposition to CO2 backloading

BERLIN (Reuters) - German Chancellor Angela Merkel faces opposition from some of her own conservative lawmakers to any move to back EU plans to prop up carbon prices, according to an internal party document.

In a paper by pro-business conservative politicians, some of whom are involved in coalition talks with the center-left Social Democrats, they objected to a European Commission plan to delay the sale of some carbon permits in the Emissions Trading Scheme.

The plan has been stalled for months partly because Berlin has withheld backing due to differences within Merkel's outgoing center-right government, but since her September election, there have been signs that a possible 'grand coalition' between her conservatives and the SPD may embrace 'backloading.

"Emissions trading is the most effective market instrument to reduce greenhouse emissions and to achieve our climate goals," the three politicians said in the paper, dated October 30, adding they wanted to strengthen the instrument.

"We reject belated political intervention, like 'backloading' and 'set-aside' in the current trading period to 2020 as it would lead to an additional burden on consumers and companies and undermine the confidence of market participants in the system."

Carbon markets are highly sensitive to the backloading proposal. While the lawmakers who wrote the paper have some influence among conservatives, they are not key decision-makers.

Merkel this month said a degree of 'backloading' is needed and documents prepared for coalition talks from both Merkel's conservatives and the SPD have been supportive of the idea.

Coalition talks are in progress and likely to take several more weeks. The group of lawmakers also said they wanted quick reductions in the incentives offered to green power producers.

(Reporting by Markus Wacket; Writing by Madeline Chambers; Editing by Stephen Brown and Elizabeth Piper)