The talks on a draft reform of the Emissions Trading Scheme (ETS) for 2021-2030 enters their final stretch, with the first informal inter-institutional meeting to negotiate an agreement on the redesign of the ETS held on Tuesday morning 4 April.
At this stage, Parliament’s negotiating team led by Ian Duncan (ECR, United Kingdom) and the Maltese Presidency has still not yet got to grips with the subject. On Tuesday, one diplomatic source informed EUROPE, “The negotiators simply discussed how to proceed. They will review all the articles in the draft directive. The next trialogue meeting will take place on 30 May”.
The respective positions decided by the Parliament on 15 February and the Council on 28 February relating to this draft directive, which seeks to make the ETS more efficient by increasing the price per ton of carbon on the European market, whilst protecting the highest energy consuming industrial sectors that are most exposed to carbon leakage and international competition, are not so far removed from one another (see EUROPE 11735, 11726).
Paris Agreement in the firing line. On Tuesday, the Carbon Market Watch NGO pointed out that Parliament's and the Council's positions “fall dramatically short of delivering the reform needed to align the ETS with the Paris Agreement”. It therefore considers that the final compromise needs to include three elements “as a bare minimum”, namely: - an annual cancellation mechanism for allowances in the Market Stability Reserve (MSR) adopted by the Council; a provision granting member states the option to cancel allowances unilaterally adopted by the Parliament and provisions excluding investments in the modernisation of coal-powered electricity plants from the ETS transition funds adopted by the Parliament.
The European chemical industry and a number of delegations that were unable to support the principled agreement at the Council are alarmed, on the contrary, by the annual cancellation of surplus allowances advocated by the Council as from 2024 (see EUROPE 11738). (Original version in French by Aminata Niang)