The European Power Sector in Transition

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Electricity continues its journey towards decarbonisation; EURELECTRIC data indicates that 56% of all net power production across Europe came from low carbon sources. This is a direct consequence of continued investments by European power companies in low-carbon generation methods whilst inefficient and carbon-heavy generation assets have been decommissioned.

An important policy tool to drive this development has been the EU Emissions Trading Scheme (EU ETS). However, the EU ETS needs to be strengthened in order for it to deliver a credible carbon price signal to drive low carbon investment.

To support further cost-efficient decarbonisation through this market-based tool, EURELECTRIC proposes a combination of measures to strengthen the ETS in the current reform:

• increasing the Linear Reduction Factor to at least 2.4%;
• increase the intake rate of the Market Stability Reserve to 24% per year from 2019 until at least 2023, and lower the applicable thresholds to make it work more swiftly in both the short and longer term.

We also support measures which ensure compensation for the cost impact of these proposals is provided to Member States that are disadvantaged due to a more carbon intensive starting point.