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Denmark Vows Action to Help Recovery of European Carbon Prices

By Ewa Krukowska
December 19, 2011 12:49 PM EST

Denmark, which will take over the European Union presidency next year, said the decline of carbon prices in the bloc’s emissions trading system to a four-year low is “not sustainable” and pledged action to deal with it.

“It’s clear to everybody and to all member states that the current situation with market prices of 6 euros per allowance is not sustainable,” Danish climate and energy minister Martin Lidegaard told a briefing in Brussels today. “It’s neither economically sustainable nor environmentally sustainable.”

Carbon allowances for delivery in December 2012 dropped as much as 3.8 percent to 6.87 euros today on the ICE Futures Europe exchange in London and closed at 7.38 euros.

“How to work this issue will depend a lot how we go with energy efficiency directive and how we go with the energy road map and the climate roadmap,” Lidegaard said. “It’s probably too early to say how we’re going to deal with it but somehow we’ll have to deal with it sooner or later.”

EU permits for December 2012 have lost 50 percent this year amid speculation that the euro-area debt crisis may worsen and concerns that oversupply of permits may increase following the introduction of new energy-efficiency legislation in Europe.

The environment committee of the European Parliament is due to vote tomorrow on amendments to the Energy Efficiency Directive proposed by the European Commission in June. They include a requirement that would be imposed on the commission to decide within six months of the law’s implementation to set aside a number of carbon allowances.

Main Priority

Energy efficiency will be the main priority in the energy and climate area during Denmark’s six-month presidency, Lidegaard said. Other priorities will include moving forward the debate on two policy papers presented by the commission earlier this year, on climate and energy.

The climate road map, which charts the way for an 80 percent reduction in greenhouse gases by 2050, showed that the EU may cut greenhouse gases 25 percent by 2020 compared with 1990, as long as it steps up energy-saving measures.

The strategy paper on energy, published earlier this month, mapped the way to cut the output of greenhouse gases while ensuring security of energy supply and competitiveness.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net;

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