EU Council rubber stamps ETS plan

EUROPE: The EU Council has formally approved plans to reform the EU emissions trading system (ETS) for the period after 2020, marking the final step in the legislative process.

The ETS sets a cap on how much CO2 heavy industry and power stations can emit
The ETS sets a cap on how much CO2 heavy industry and power stations can emit

First published on Ends Europe

In a statement, the Council formally approved the reform of the EU ETS, in a move it said represented a significant step towards the EU reaching its 2030 greenhouse gas emission target.

The ETS sets a cap on how much CO2 heavy industry and power stations can emit. Under the reforms to the mechanism, owners of large power stations across Europe are set to pay a higher price for the CO2 they pump into the atmosphere.

The reforms aim to strengthen a 'market stability reserve' system designed to address a glut of tradable emissions permits, which has kept the cost of pollution below levels necessary to drive a switch to low-carbon technology.

The reform package will also see the acceleration in the rate at which the annual volume of allowances issued fall after 2020.

Increasing the 'linear reduction factor' from 1.73% to 2.2% will see the overall emissions cap fall from more than 1.9 billion tonnes currently to just over 1.3 billion by 2030.

Under the revised ETS directive, a number of new provisions have also been suggested to protect industry against the risk of carbon leakage.

For example, revised free allocation rules will enable better alignment with the actual production levels of companies, and the benchmark values used to determine free allocation will be updated.

Bulgarian minister of environment and water Nemo Dimov said the Bulgarian presidency will work towards "retaining the EU's leading role in the negotiations on the conclusion of the implementation rules of the Paris agreement".

"Reducing greenhouse gas emissions will not only contribute to the fight against climate change but it will also positively impact the improvement of the air quality," he said.

It is hoped that the revised ETS directive will help the EU to reach its target of cutting greenhouse gas emissions by at least 40% by 2030, as set out under the EU's 2030 climate and energy framework.

According to the EU Council, the new directive will enter force on the 20th day following its publication in the official journal.

"For many years the ETS has been plagued by over-supply and low carbon prices. The system as it stands does not incentivise investments in Europe's energy transition," said Joël Meggelaars, WindEurope's head of advocacy and messaging.

"With this deal the ETS can recover and become more meaningful. We need stronger signals to get rid of conventional over-capacity in the power sector and avoid new investments in new high-carbon assets," Meggelars added.

First published on Ends Europe

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