Abby L. Harvey
GHG Monitor
7/24/2015
The European Commission last week released its proposed revision of the Emissions Trading System (ETS), which is intended to deal with an ongoing surplus of allowances within the system and will serve as a key step toward the EU’s global climate commitments. The reform would develop a market stability reserve, a system under which allowances would automatically be taken off the market if the surplus reached a certain threshold. Those allowances would then be returned to the market if there were a lack of available allowances. “The proposed rules aim at safeguarding the international competitiveness of the EU energy intensive industries in the gradual transition to a low-carbon economy as long as no comparable efforts are undertaken in other major economies, and maintain incentives for long-term investment in low-carbon technologies,” according to the document.
The proposal now moves on to the European Parliament and Council for adoption as well as to the Economic and Social Committee and the Committee of the Regions for opinion. The Commission will work with these institutions through this process in an effort to see the legislation through. The reform, should it be finalized, would take effect on Jan. 1, 2019. After 2021, the quantity of allowances would decline by 2.2 percent each year.
Emission Trading System reform is an integral first step toward achieving the EU’s global climate commitments, according to a commission statement released alongside the proposed reform. The EU has committed to reduce greenhouse gas emissions by at least 40 percent domestically by 2030 as part of its contribution to the new global climate deal due to be adopted at the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change, to be held in Paris in December. "My message to our global partners ahead of the Paris climate conference: the EU stands by its international commitments. And my message to investors, businesses and industry: invest in clean energy; it’s here to stay and continue to grow. With these proposals, Europe is once again showing the way and leading the global transition to a low-carbon society," EU Commissioner for Climate Action and Energy Miguel Arias Cañete said in the release.
The proposed reform is a step in the right direction, but more must be done to secure a low-carbon future, Jonas Helseth, director of Norwegian environmental group Bellona Europa, said in a release. “An agreement on the reform of the EU ETS is key to addressing the persistently low carbon price. Agreement on the Market Stability Reserve offers hope of stabilizing the carbon price at a higher level, but complimentary measures may still be necessary to achieve deep decarburization,” Helseth said.
Reform Includes Funding Opportunities for CCS
The reform also proposes increased support for carbon capture and storage technology through a new innovation fund, which would be established in 2021 as a means of channeling funding toward low-carbon technologies. “In addition, to supplement the resources already being used to accelerate demonstration of commercial CCS facilities and innovative renewable energy technologies, EU ETS allowances should be used to provide guaranteed rewards for deployment of CCS facilities, new renewable energy technologies and industrial innovation in low-carbon technologies and processes in the Union for CO2 stored or avoided on a sufficient scale, provided an agreement on knowledge sharing is in place,” according to the document.
