DECC has replied to my 17 July question Is Ed Davey a thief in waiting? The letter says the UK is not advocating the confiscation of private property by way of cancelling ETS allowances already in market circulation. Full text herewith. Some questions remain however.
First, why did the UK issue a vague policy paper when it could (or should) have issued a clearer one? Existing ETS allowances owners would have been reassured their property will retain its value. In turn, those in EU institutions could not be asked to vote against ETS reforms based allowance owners’ fears of being cheated.
Second, if the allocation of fewer ETS allowances needs new legislation (as most expect) wouldn’t it be helpful to say so now in clear terms so that different specific options can be compared?
- For example, is the UK concept compatible with the EC proposal for a Market Stability Reserve (MSR)? (I suspect not.)
- Is the EC MSR plan the right instrument with the wrong parameters? (I suspect so.)
- How do the years up to and then after 2020 relate to each other?
- Could the Linear Reduction Factor (Article 9) be adjusted in effect to soak-up the surplus in the market and if so from when?
- Will UK table MSR amendments in the Council working group? If so saying what precisely?
- What new legal provisions are best left for the main legislative proposal to be tabled in the new mandate?
Finally, if the UK reconsiders and changes its position, will it revise or replace its 16 July policy paper? I hope so.