ETS: ambition and realism needed for successful reform

Today, the European Parliament's Industry Committee adopted its position on the reform of the European carbon market, the Emissions Trading Scheme (ETS). The vote was a success for the EPP Group as it keeps the ambitious emission reduction objectives in the spirit of the Paris Agreement on climate change while offering better protection of European business competitiveness. These are the EPP Group's priorities for improving the European Commission’s proposal on the reform of the European carbon market.

EPP Group Shadow Rapporteur, Esther de Lange MEP, said: “I welcome the commitment of the four largest groups and the Rapporteur in particular on reaching an ambitious and realistic agreement on the ETS reform. The outcome of this vote is a strong signal to the colleagues in the Environment Committee. A large majority of Members in the Industry Committee are saying that the ETS is not only a climate policy, it is an industrial policy as well and as such, crucial for the competitiveness of our businesses and the jobs of our citizens. There is no question that Europe will need to achieve significant reductions in our C02 emissions. We believe this should and can be done with industry rather than against it, avoiding carbon as well as investment leakage."

Some of the key elements of the deal in the Industry Committee include:

• an annual reduction of the available emission allowances of 2.2% (the so-called Linear Reduction Factor);

• an overly-complicated and unfair system of allocation of free allowances is avoided (no tiering, following the Commission proposal);

• more free allowances to address carbon leakage risks and avoid the C-factor (57% - 5% in case the C-factor is triggered);

• a more European approach for indirect cost compensation (of higher energy costs due to emission rights trading) and;

• an increased threshold for small emitters to opt out from this system (50,000 tonnes instead of 25,000 tonnes).

After this vote, the negotiations will continue in the Environment Committee which is expected to vote on its Report on the 8th of December.