Council position puts EU on track to stronger ETS reform - EURELECTRIC

EURELECTRIC welcomes the adoption by the Environment Council of its position on the revision of the EU ETS for the period after 2020.

 “The position adopted by the Environment Council sets us on a path towards a necessary reform that will strengthen the EU ETS and deliver a stronger carbon price in the short and medium term,” said EURELECTRIC Secretary General, Kristian Ruby.

 “However, the decision to keep the linear reduction trajectory at 2.2% is a missed opportunity to signal EU ambition in the 2050 perspective and ensure longer term investor incentives.”

 “EURELECTRIC is pleased that the position adopted yesterday by the Council sends a strong signal of the willingness to address the problems that have plagued the European carbon market over the years. It will now be important for the European Parliament and the Council to progress swiftly and reach agreement on strengthening the EU ETS in the current reform,” he added.  

 The position adopted by the Environment Council includes several measures aimed at strengthening the EU’s carbon market including doubling the intake rate of the Market Stability Reserve for five years, and an instrument whereby annually, starting in 2024, allowances held in the reserve over a certain threshold will be cancelled. The Council position also adds a new provision that would limit Member States to providing not more than 25% of auctioning revenues towards indirect compensation of carbon costs for industry.

 EURELECTRIC believes that further work will be needed to find appropriate compensation for Member States with high carbon intensity and low GDP/capita levels that will be faced with significantly higher investment needs than they would under the Commission’s proposal.

 Moreover, the governance of the Modernisation Fund should be simplified, and controlled primarily by the beneficiary Member States, to support low carbon investments in eligible Member States that are cost-efficient and contribute to the long term decarbonisation objective.

EURELECTRIC also believes that following the recent publication of the Clean Energy Package, ensuring consistency and coherence between the various climate and energy targets for 2030 will be crucial.

“European climate and energy policies and implementing instruments should be complementary. As negotiations on the Clean Energy Package move forward, the impact of other policies on the EU ETS should be properly assessed and tackled”, Ruby added.

The revised ETS Directive must include provisions on an agreed methodology to assess, in a transparent manner, the impact of other policies on the EU ETS. This must be complemented with a methodology to appropriately recalibrate the supply side in order to overcome the impact of measures that reduce demand.