A heated debate is ongoing within the European Union regarding the EU Emissions Trading Scheme (EU ETS). In July, the European Commission presented a proposal to revise the scheme, and on 12 October this became the subject of political debates held by the Council of the EU. The Council has stated its aim to combine stronger climate ambitions with support for industrial competitiveness.
This was reported by the Council of the European Union.
The EU ETS is the bloc’s key climate policy instrument, which helps to reduce emissions and is the world’s first and largest carbon market. It requires companies to pay for their CO₂ emissions. Supporters of the EU ETS believe it encourages businesses to invest in the ‘green’ transition, whilst opponents see it as placing excessive financial pressure on them.
"We must ensure that the EU Emissions Trading System is fit for the next decade. Our aim is to align our carbon market with our climate ambitions in a way that also ensures the competitiveness of our industry,” emphasised Dara O’Brien, Ireland’s Minister for Climate, Energy and the Environment, who currently holds the presidency of the Council of the EU.
They added that the review of the EU ETS should align the carbon market with the EU’s climate target – to reduce greenhouse gas emissions by 90 per cent by 2040.
The ministerial discussions are focusing on the trajectory of the annual emissions cap after 2030, as well as the use of international carbon credits and carbon sequestration projects.
The debate also assessed the proposed mechanisms for financing and allocating free allowances. Some politicians expressed the view that the EU ETS should be extended to cover aviation, shipping and the waste management sector.
O’Brien noted that they would aim to reach agreements on the revision of the ETS by December 2026.
At the same time, according to data from Politico, the three largest political groups in the European Parliament are set to oppose any watering down of the emissions trading scheme.
It was previously reported that the European Parliament intends to make significant amendments to the European Commission’s proposal. In particular, the Member States wish to require 75 per cent of ETS revenues to be reinvested in the eco-modernisation of businesses
A number of countries will call for the cancellation of the revocation of ‘excess’ quotas in the Market Stability Reserve.
As a reminder, the European Commission presented its proposal to reform the EU carbon market on 17 July. It includes, in particular, an increase in funding for decarbonisation, an extension of the period for receiving free allowances, and a reduction in the level of allowances transferred to the market stability reserve.
Work is continuing in Ukraine on the legislative framework for establishing a national emissions trading scheme. In addition to the draft bill from the Ministry of Economy – which was drawn up taking into account feedback from experts and stakeholders – there are three parliamentary proposals. A detailed comparison of these can be found in the article by EcoPolitika.
