Government suffers first major defeat of EU presidency

The Government had its first major defeat of its EU presidency when members of the European Parliament rejected a deal on greenhouse gas emissions, jeopardising the union’s climate policy.

Environment Minister Phil Hogan, who was piloting the vote through the parliament, admitted he was disappointed but said he would make another effort to have it passed.

Making companies pay for permits to cover the amount of carbon dioxide they release into the atmosphere has been a key part of the EU’s climate change policy.

But with the economic crisis and too many free permits, the market for carbon has collapsed, jeopardising the whole system.

A short-term fix to freeze auctions of a portion of CO2 emissions in the hope of boosting the price was expected to be approved by MEPs in Strasbourg, but it was rejected by a small majority of 19 votes.

Minister Hogan said they will continue to discuss with MEPs to try to get their agreement to the measures over the coming days. “While I can understand concerns around intervening in a market-based instrument, the reality is the EU is faced with an exceptional policy situation which demands an exceptional policy response,” he said.

Environmental group WWF accused members of the parliament of conceding to the wishes of big business, saying the companies had engaged in huge lobbying over the past months.

“With carbon prices at an all-time low, the vote will further undermine the security of investments in low-carbon technologies,” said Sam Van Den Plas of WWF. He added they were dismayed lawmakers caved into a small but intense business lobby and now faces a lost decade of climate action.

The European Trade Union Confederation said the vote dented the credibility of the EU’s climate policy framework and its leadership role in international discussions.

“The European carbon market will remain clinically dead until structural decisions are taken to reform it, meaning that no effective price signal will be sent to investors for years,” said ETUC general secretary Bernadette Ségol.

MEPs voted to exempt air flights to and from non-EU airports from the EU emissions trading scheme — a move that was deploredby the European Low Fares Airline Association. They said it excluded more than 80% of EU aviation emissions and imposed an unfair burden on those who operate intra-EU flights.