ETS reform can protect jobs and achieve climate goals

"Today is a good day for climate protection and the competitiveness of our industries. Above all, it is a good day for jobs," said Peter Liese MEP, the European Parliament’s lead negotiator on the upcoming reform of the EU’s Emission Trading System (ETS). 

The European Commission has today proposed adjustments to the ETS, lowering the linear reduction factor from the current 4.4% to 3.7% starting in 2031. From 2036, it would be further reduced to 1.7%. 

"It is now clear that emissions trading, the world’s most important climate protection tool, is here to stay. The Commission recognises that it makes no sense to demand zero emissions from energy-intensive industries or aviation as early as 2039. These adjustments are fully compatible with the EU’s 2040 climate target and the goal of climate neutrality by 2050," emphasised Liese.

A key aspect of the reform is an increase in the number of free allowances. The phase-out of free allowances under the Carbon Border Adjustment Mechanism (CBAM) will be delayed from 2034 to 2038. In return, stricter conditions apply from 2031: companies must submit investment plans, and some allowances will only be allocated once construction of climate-friendly facilities begins.

"We want to give industry more time, but during this period, they must not sit back and do nothing; instead, they must prepare the specific investments. Climate protection that leads to unemployment is not a global role model. Investment within the EU is our goal, and this proposal achieves it far more effectively," stressed Liese.

"Frontrunners in decarbonisation must not be penalised," said Liese. Under the Commission's proposal, the lowest 10% of emitters would be exempt from conditionality rules, and zero-emission companies would be able to remain in the ETS until 2040, instead of 2030, to finance investments using free allowances.

Both the Council and Parliament must have finalised their positions by the end of this year so that the trilogue can begin in January. "This timetable is very ambitious, but necessary. The sooner we have clarity, the better," said Liese.