UK markets open in 2 hours 15 minutes
  • NIKKEI 225

    +354.96 (+1.29%)

    +285.66 (+1.47%)

    +0.61 (+0.85%)

    +7.90 (+0.44%)
  • DOW

    +183.56 (+0.55%)

    +257.81 (+1.87%)
  • CMC Crypto 200

    +11.37 (+2.88%)
  • ^IXIC

    +123.45 (+1.13%)
  • ^FTAS

    -11.44 (-0.28%)

Countries back rewritten EU plan to raise carbon market cash

By Kate Abnett

BRUSSELS (Reuters) - European Union countries on Tuesday agreed an alternative to an EU plan to use a carbon market reserve to help finance their exit from Russian gas, after fears the original proposal would undermine the bloc's main climate change policy.

As part of its aim to end Europe's reliance on Russian gas this decade, the European Commission had said countries could raise 20 billion euros for new energy investments by selling CO2 permits stored in the EU carbon market's "market stability reserve".

EU countries' finance ministers agreed on Tuesday to instead raise 15 billion euros from an EU Innovation Fund - an existing pot of carbon market revenue that is currently spent on breakthrough green technologies. The other 5 billion euros would come from proceeds from CO2 permit sales held earlier than planned.

Czech finance minister Zbyněk Stanjura, who chaired the meeting, thanked his counterparts for making "significant concessions" in order to reach a deal.

French Finance Minister Bruno Le Maire said the agreement would help countries to fight inflation and invest in cutting reliance on fossil fuels.

"France will in particular be able to benefit from subsidies," he said.

The Commission's initial proposal hit resistance from some countries who said opening up the reserve would undermine the EU's carbon market and depress the carbon price - making it cheaper for power plants and industries to pollute.

Denmark, the Netherlands and France had all put forward alternative proposals to avoid touching the EU carbon market reserve - which launched in 2019 to tackle a problem of oversupply that had weighed on ETS prices for years. Since then, carbon permit prices have surged.

EU countries must negotiate the final law with the European Parliament, which has yet to confirm its negotiating position.

A committee of EU lawmakers this week voted to raise the 20 billion euros by bringing forward planned auctions of EU carbon permits - a proposal that will now be put to a vote in the full parliament.

(Reporting by Kate Abnett; additional reporting by Leigh Thomas, editing by Ed Osmond)