LONDON (Reuters) - Britain wants reforms to Europe's Emissions Trading System (ETS) to start from 2017 to tackle the scheme's massive oversupply and boost investment in clean technologies.
Siding with an earlier view from Germany, the British government said in a statement on Monday that it wants the so-called market stability reserve (MSR) to be in place four years earlier than proposed by the European Commission.
The Commission, the EU executive, has proposed from 2021 to set aside hundreds of millions of surplus carbon allowances from the ETS to help firms cope with economic shocks.
Britain also wants 900 million carbon allowances from a more limited backloading reform programme to be cancelled or inserted directly into the reserve.
"The UK supports an MSR that is strengthened and introduced earlier so it can fully tackle the damaging surplus, provide a credible, stable low carbon investment signal and ensure Europe can meet its emissions reduction obligations more cost effectively," the statement said.
It added that it wants changes to the proposal to "ensure allowances are retained in the reserve under ‘business as usual circumstances', so they remain available to provide protection against insufficient liquidity and prices rising too quickly".
A majority of EU member states and the bloc's Parliament must agree for the proposal to be made law. Coal-dependent Poland opposes the measure but few other countries have taken sides.
Progress on the bill is closely watched by carbon market participants as analysts say the reserve could add around 11 euros to carbon prices
The EU ETS, the world's biggest carbon market, regulates around half of Europe's greenhouse gas output by forcing over 12,000 power plants, factories and airlines to surrender an allowance for every tonne they emit.
(Reporting by Ben Garside; Editing by David Goodman and Susan Thomas)