Brussels, 22/07/2015 (Agence Europe) - The eagerly awaited proposal on the reform of the EU's emissions trading scheme ETS for the period from 2021 to 2030 that was unveiled by the European Commission on Wednesday of last week (see EUROPE 11360) has already displeased some, even though there is general consensus that it at least has the merit of seeking to address the shortcomings of the system as a matter of urgency. Some believe that it is not sufficiently ambitious to allow the market instrument that is the ETS to bring down greenhouse gas emissions by as much as is needed to tackle the climate emergency. While others, on the contrary, do not think the proposed reform does enough to protect carbon-intensive industries.
Not enough for climate. The NGO Health Care Without Harm (HCWH) feels that the reform falls far short of what is needed to make a meaningful difference from the climate change point of view.
With the price of carbon plummeting to €7 per tonne and a massive oversupply of pollution permits, HCWH points out that the annual 2.2% reduction in the total number of quotas allocated limits the overall reduction of emissions to exactly 40%, despite the agreement in the European Council of October 2014 to cut emissions by at least 40%. Shameful is how the NGO describes it. Furthermore, the Commission proposed moving 250 million allowances from the market stability reserve to a new entrants reserve, which will make them available once again after 2020. In HCWH's view these allowances should be completely removed from circulation.
CEPI disappointed. The Confederation of European Paper Industries (CEPI) is pleased that protection for energy-intensive industries against the threat of carbon leaked has been retained but feels that this protection falls short of expectations. It believes the linear reduction of the benchmarks used for free allocation is reasonable and improves predictability but says that “the proposal does however not solve the lack of free allocation for Combined Heat and Power Plants in Europe”. CEPI notes that the proposal strengthens the focus of member states on compensation for higher electricity costs to industry, “but does not lead to a harmonised EU approach, which is what the internal market requires”. It appreciates the focus on low carbon investments and support for technology and innovation in the new proposal, as well as the use of more accurate production data. (Aminata Niang)