European Union policy makers may reach a decision in the first half of next year on a proposal to introduce automatic supply controls in the world’s biggest emissions market, according to a senior EU official. EU governments and the European Parliament are unlikely to finish work on the reform proposed by the European Commission before the end of this year, said Jos Delbeke, director general for climate at the EU’s regulatory arm. The draft law aims to alleviate oversupply in the cap-and-trade program and help emission prices rebound from near record lows. “This year would be challenging as the Parliament has to constitute themselves after elections,” Delbeke said in an interview in Brussels yesterday. “The exact timetable depends on member states and the Parliament, but all elements should be on the table in the first half of next year.” The stability reserve measure was proposed by the commission in January along with a strategy on climate and energy policies for 2030, under which the regulator also wants to deepen EU carbon cuts from 20 percent in 2020 compared with 1990 levels. The reserve aims to limit imbalances caused by an excess of permits in the emissions-trading system, which swelled to above 2.1 billion allowances last year, more than the annual pollution cap in the program, according to commission estimates. Coupled with an economic crisis and inflows of cheaper imported emission credits, the glut helped drive the price of EU carbon allowances to a record low of 2.46 euros a ton in April last year. The supply of permits will be reduced if there is an accumulated surplus of at least 833 million metric tons, according to the market stability reserve proposal. If the surplus fell below 400 million tons, the EU would begin returning allowances to the market from the reserve. Last Round The draft measure, which would introduce automatic supply curbs or injections starting in 2021, has divided EU governments. During the last round of talks in April, some nations including Poland and Bulgaria argued that the proposal should be linked with continuing EU discussions about the 2030 climate and energy targets, according to people with knowledge of the matter. EU leaders aim to reach an agreement on the 2030 framework in October, paving the way for the commission to propose detailed legislation on how to reach the goals. A group of member states including Germany, Denmark and the U.K. signaled that they prefer the carbon-market reform to be dealt with independently and opt for a faster start of the reserve. German Environment Minister Barbara Hendricks, who prefers the introduction of the mechanism in 2016, said last month that she sees “a lot of support” to strengthen the EU emissions-trading system before 2020. Early Start An early start of the reserve would require an amendment to that effect backed by a qualified majority of 260 out of 352 government votes in the EU Council and a simple majority in the European Parliament. The commission would then need to announce whether it approves such a change, Delbeke said. Under the EU law a negative commission verdict could be overturned by a unanimous decision by governments. “Some member states would like to advance the dates, many chief executive officers also express their support, but for it to happen there needs to be qualified majority in the Council,” Delbeke said. “The decision is in the hands of governments and the Parliament. If both decide to support an early start the commission will not object.” 12,000 Installations The ETS, started in 2005, imposes decreasing pollution caps on about 12,000 installations owned by power producers and manufacturers including EON SE and ThyssenKrupp AG. Each year they must surrender enough permits, which they get for free or must buy at auctions, to account for their discharges or pay fines amounting to 100 euros ($135) a ton. Emission permits for December rose 0.4 percent to 5.42 euros on the ICE Futures Europe exchange as of 8:10 a.m. in London. The Parliament is yet to decide whether to resume talks on the measure in July, the first possible timing after elections in May, or whether to schedule them for September, after its summer recess in August. In one of the first steps in the work on the proposal, the assembly will need to choose a new rapporteur, or a member that would oversee the draft law. The previous rapporteur, French member of the European People’s Party Sophie Auconie, was not re-elected. The environment committee, which leads work on climate-related laws in the Parliament, will then draft a report on the proposal and its members will have the right to propose amendments. Once such a report has been approved in a vote, the committee may opt to mandate the rapporteur to start the so-called trilogue, or informal talks with governments on a compromise version of the proposal. Parallel Process EU nations will seek to define their position on the proposal in a parallel process. Representatives of national governments already had initial discussions on the draft in April and will next meet on the matter on June 16. They need to reach an agreement on the draft before the trilogue can start. The procedure in which the measure is considered, known as co-decision, typically takes between a year and two years from the moment the law is proposed until it becomes binding. A one-sentence amendment to the EU emissions-trading law proposed in July 2012 to enable some carbon-permit auction delays took EU policy-makers 12 months to approve.