EU ETS negotiators must urgently close a reform deal

News Article

The European power sector is concerned about the failure to agree a final deal on the EU ETS reform yesterday evening. EURELECTRIC believes a widely supported final agreement is within reach and urges policymakers to agree on a reformed EU ETS ahead of COP23 meeting in Bonn.

“Investors across Europe need legal certainty to take informed decisions on low-carbon investments,” said EURELECTRIC Secretary General, Kristian Ruby. “Confidence in the long term functioning of the EU’s carbon market must be ensured now as the MSR is about to kick in and phase IV is around the corner,” he added.

The trilogue negotiations of last night were on the right track to deliver on the level of ambition that can provide a meaningful carbon price signal for a cost-efficient decarbonisation through:

  • Doubling of the MSR intake rate to 24% from 2019 until 2023;
  • Cancelling allowances from MSR above the previous year’s auctioning volume from 2023 already;
  • Allowing for voluntary cancellation of allowances by Member States due to power plant closures;

Right now we have to ensure that all elements that help to increase the level of ambition in the EU ETS remain part of the final agreement. The final text must ensure a right balance between strengthening the EU ETS and achieving just energy transition.

Getting the governance and the size of the Modernisation Fund right could be a deal breaker. Therefore, we urge policymaker to consider increasing the size of the Fund between 2% and 4%. In addition, a robust governance system without top down command and control measures will guarantee full transparency of investments which respect competition and prioritise modernisation of generation, grids and efficiency improvements.

“An ambitious deal is needed now to send a clear political message about the EU’s leadership in the global climate action for the rest of the world,” concluded Ruby.