European Parliament committee fails to agree on carbon reform start date

Hoping to bolster carbon prices to spur industry to switch to greener energy, the European Union aims to temporarily remove hundreds of millions of surplus EU Allowances (EUAs) from the market from 2021.

Plans call for placing them in a Market Stability Reserve and returning them into circulation if demand rises.

Some member states, such as Germany and Britain, would like to see the EU set up the reserve in 2017.

Big utilities including Germany's E.ON also support that date while coal-reliant Poland opposes measures to boost carbon costs.

On Thursday the Parliament rejected the 2017 start date, backed 2021, then rejected both decisions.

"I would consider today's outcome an own goal (by the industry committee) that has missed the opportunity to significantly influence the further process," said Marcus Ferdinand, an analyst at Thomson Reuters Point Carbon.

The outcome gives more weight to an environment committee vote due next month which is widely expected to back the 2017 start date, parliamentary sources said.

The benchmark EUA price fell by as much as 5.5 percent to 7.00 euros after the voting.

It was trading at 7.15 euros as of 1019 GMT.

The Emissions Trading Scheme (EU ETS) is the EU's flagship tool for cutting greenhouse gas emissions by charging industry and utilities for the right to emit carbon dioxide.

Oversupply of EUAs on the EU ETS and demand slackened by weak economic growth across Europe have created a glut of more than 2 billion permits.

(Reporting by Barbara Lewis and Susanna Twidale; editing by Jason Neely)