EU countries demand stricter controls on new CO2 price

By Kate Abnett

BONN (Reuters) -Germany, the Czech Republic and 14 other countries have demanded the European Union introduce stricter price controls to the bloc's new carbon market, over fears the policy will raise consumers' bills, a document seen by Reuters showed.

The paper, which has support from enough countries to form the "qualified majority" needed to pass EU laws, aims to pressure the European Commission to change the EU carbon market for transport and heating fuels, which is due to launch in 2027.

"To address the legitimate concerns around price uncertainty and social impacts and to strengthen the public acceptance of the system, improvements should be considered already prior to the market's launch," the paper said.

The new EU carbon market will impose a CO2 price on suppliers of polluting fuels used in cars and buildings. It is designed so that if the CO2 price hits 45 euros, extra CO2 permits will be released into the market to tame prices.

The countries proposed strengthening this, to add more CO2 permits to the market if prices spike.

The EU should also strengthen a special "reserve" that adds extra permits to the market if supply is tight, alongside other changes including launching carbon permit auctions early, to give an indication of prices, they said.

The document was also signed by Austria, Belgium, Bulgaria, Croatia, Estonia, Italy, Latvia, Lithuania, the Netherlands, Poland, Romania, Slovakia, Slovenia and Spain.

Countries including Poland and the Czech Republic have previously warned the policy could stoke a backlash against ambitious climate change measures if it raises fuel bills.

The EU has agreed that billions of euros in proceeds from the new market will be set aside to help citizens pay bills, subsidise electric cars and energy-saving home renovations.

The EU has scaled back green policies this year, as it attempts to contain a political pushback on its green agenda.

The EU has not so far watered down its core emissions-cutting targets. But the Commission is considering weakening a planned climate target for 2040, to attempt to win support from sceptical countries, Reuters previously reported.

The Commission is due to propose the 2040 climate target on July 2.

(Reporting by Kate Abnett, editing by Ed Osmond)