The proposed post-2020 reforms to the EU Emissions Trading System are set to move forward next week with possible approval by EU ambassadors at the EU Council on Wednesday.
EU ambassadors will consider for endorsement the informal deal reached November 8 between the EU Parliament and Council on the EU ETS reforms.
The ambassadors are meeting Wednesday at the committee of permanent representatives to the EU Council, or COREPER.
The informal agreement will also be discussed Tuesday morning by the EU Parliament's environment committee (ENVI), which will then vote on the measure at a future meeting.
The deal would then go to the parliament for a plenary vote, the date for which has not yet been agreed.
Once those steps are taken, the deal will be included as an item for adoption without discussion at an upcoming EU Council meeting, although a date has not yet been set for this, an EU source said Friday.
Including publication in the EU Official Journal, these are the final steps needed for the post-2020 reforms to pass into law.
EU carbon allowance prices under the EU ETS made modest gains in Week 46, closing Friday at Eur7.48/mt, down 2 euro cent from Thursday's close, but up 8 euro cent or 1% from a week ago.
In the wider energy markets, a several months-long rally on German power finally halted in mid-November, with Cal 2018 baseload power dipping back to just above Eur36.00/MWh on Thursday, from a peak of Eur37.20/MWh at the close on November 6.
This largely reflects renewed weakening in the year-ahead coal price for delivery into Europe since the start of November.
Meanwhile, the German year-ahead clean dark spread for 45% efficiency units -- representing profit margins for coal-fired power after coal and carbon costs -- moved higher to Eur6.33/MWh on November 16, compared with Eur5.48/MWh on November 3, providing notional support for carbon prices.
On the news side, a group of industry associations, including those representing carbon markets, traders and exchanges, on November 15 warned the EU Climate Change Committee to take care when crafting regulation to safeguard the EU ETS from a hard Brexit.
The groups including IETA, EFET, ISDA and Europex, warned of the risk that marking and invalidating UK-issued EUAs could cause contractual and legal problems throughout the entire market.
The groups said they backed the UK government's proposal to bring forward the 2018 compliance deadlines to a date earlier than March 29, 2019, to ensure certainty for UK-based plant operators and avoid invalidating UK EUAs.
The groups expressed a preference that the UK and EU agree a continued UK participation in the EU ETS until at least 2020. The market appears to be consolidating at around Eur7.50/mt, awaiting renewed direction for the time being.
Looking ahead to Week 47, prices may take support from Wednesday's COREPER meeting, particularly if EU ambassadors endorse the informal agreement on post-2020 EU ETS reforms without further complications.
This would clear the way for a vote by the EU Parliament's ENVI committee and later a full parliament plenary vote.
There is uncertainty about how much upside potential exits for carbon as the reforms move toward their final stages, and prices have struggled to hold above Eur8.00/mt in recent weeks, suggesting this could remain a resistance level in the short term. - Platts -