EU Leaders Reject Using Booming Carbon Market to Finance Budget
European Union (EU) flags fly outside the European Commission headquarters, in Brussels, Belgium. (Photographer: Jock Fistick/Bloomberg)

EU Leaders Reject Using Booming Carbon Market to Finance Budget

(Bloomberg) -- A proposal to use some revenues from the European Union’s burgeoning carbon market for the bloc’s next budget failed to win support from leaders, according to Poland’s Prime Minister Mateusz Morawiecki.

Poland was among countries that blocked the initiative, which could have cut revenues for national budgets, Morawiecki told reporters in Brussels after a meeting over the EU budget ended in deadlock. Germany led the opposition against the plan, according to two European diplomats, who spoke on the condition of anonymity.

Under the latest draft proposal by European Council President Charles Michel, revenue from sales of permits in the region’s Emissions Trading System above the average annual revenue per member state from 2016-2018 auctions would become a new source of financing for the bloc’s next seven-year budget.

EU carbon permits have jumped fivefold in the past three years following a reform that alleviated oversupply in the world’s biggest cap-and-trade market. The price of emissions allowances traded on the ICE Futures Europe exchange in London averaged 9 euros per metric ton of CO2 in the 2016-2018 period. That compares with 25.6 euros at the close on Friday.

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