TheCompensators* » European Commission suggests reforms to the ETS

European Commission suggests reforms to the ETS

On January 22nd, the European Commission has published its proposal for 2030 greenhouse gas reduction and renewables targets. The Comission’s proposal is highly controversial, with NGOs and renewables interest groups against it and industry groups very satisfied. The emission reduction target seems acceptable even though it could be more amibitous. The renewables target is very weak in comparison to the current legislation for the time until 2020.

Here the main facts:

The proposed greenhouse gas (GHG) reduction target for 2030 is a 40% reduction compared to 1990 levels. Effort sharing for non-ETS sectors shall remain to be based on a GDP-based distribution and deliver a 30% reduction compared to 2005 levels.

The ETS sector it supposed to deliver reductions of 43% compared to 2005 levels. This entails a reduction of the annual ETS cap by 2.2% per year between 2020 and 2030.

A market reserve is planned for 2021 according to the following rules:

> The reserve will be increased by 12% if this amounts to 100 million allowances, i.e. if more that 833 million allowances have been in circulation two years earlier. In other words, if 1000 million allowances are in circulation in 2022, 120 million equivalent to 12% will be put on reserve in 2024. In contrast, if only 800 million allowances are in circulation, nothing will be put on reserve.

> 100 million allowances will be released to the market if less than 400 million allowances are in circulation.

Further provisions are proposed to avoid extreme market reactions at the end of trading periods. But no details have been given yet.

After the backloading of 900 million allowances was decided in December 2013, the Commission’s proposal is finally taking the ETS reform one step further.

TheCompensators* welcome the reform, while we critizice that it seems to have come at the expense of other sustainable policies. Nevertheless, the Commission’s proposals proves that the ETS is everything but obsolete. The deletion of emission allowances makes as much sense as ever! Your donations to TheCompensators* make a difference.


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