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European Union carbon allowances posted their biggest drop since April after a panel in the blocs parliament failed to agree on how to modify a measure curbing a glut of carbon permits.

Permits fell as much as 8.1% after the European Parliaments industry committee, which has an advisory role in the legislative process, rejected a recommendation on a mechanism to withhold surplus allowances. Earlier, committee members backed inclusion in the report of an amendment to start the market overhaul in 2021, as envisaged by the European Commission, while a proposal for it beginning in 2017 was rejected.

The 28-nation EU is seeking to strengthen its cap-and-trade emissions program after the price of permits plunged almost 70 percent since 2008 to levels that fail to deter industry from burning coal, the most polluting fossil fuel. The measure debated by lawmakers introduces the market stability reserve to automatically adjust the volume of permits in circulation.

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There is no formal opinion adopted today but there were important political signals, especially on the starting date, as well as provisions protecting companies relocating to escape emission limits, Ivo Belet, the Parliaments lead lawmaker on the draft law, told reporters after the vote in Brussels. We cant neglect those votes on those particular compromises.

Benchmark EU allowances fell 7.7 percent to close at 6.84 euros ($7.84) a metric ton, the biggest drop since April 25, on the ICE Futures Europe exchange in London. Volume surged 69% to 46 million metric tons, the most since Dec. 10 and almost quadruple the three-month average.

In todays final ballot, the industry committee voted 31 to 28, with seven abstentions, against an entire report even after approving individual amendments.

The most important thing to highlight is that the committee did not reject the market stability reserve, said Sarah Deblock, director of EU affairs at the International Emissions Trading Association. Its up to the environment committee to decide about the shape of the law.

Under the draft measure, the reserve would automatically absorb allowances if the surplus exceeds a fixed limit and release them to the market in the event of a shortage. National governments and the EU Parliament can modify the draft proposal, with Germany and the U.K. pushing for a 2017 start. Poland, which relies on coal for most of its electricity generation, opposes an early introduction.

In votes on individual amendments, Christian Democrats and Conservatives mustered a majority in favor of starting the reserve in 2021. Groups including the Socialists, Liberals and Greens were pushing for the 2017 start.

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EU Carbon Plummets as Panel Rejects Market Fix Recommendation