If the EU is to meet the 1.5° target of the Paris Climate Agreement, it is essential that it radically reform its greenhouse gas emissions trading system (ETS) to reduce the number of allowances, according to a study recently published by the Finnish innovation institute Sitra and the Öko-Institut, a German research institute specialised in sustainability issues.
This study on ‘the role of ETS in raising the EU’s ambition’ examines how ETS objectives should be modified in a scenario where the EU’s emission reduction target would increase from at least 40% currently to 55% or 60% by 2030 compared to 1990. The President-elect of the European Commission, Ursula von der Leyen, said she was ready to raise the EU’s 2030 target to 50% or even 55%. All parties to the Paris Agreement are expected to update their NDCs by 2020.
The study shows that the strengthening of the cap is the key measure and that, ideally, it should be accompanied by a strengthening of the market stability reserve, i.e., a reduction of the excess quota on the market.
"We simply do not have the time to start making cosmetic adjustments to the EU ETS or building new systems”, commented Sitra researcher Outi Haanperä on Monday 18 November.
The introduction of a carbon floor price, the reduction of the number of emission allowances, the reduction of their free allocation and surplus and the extension of the scope of the ETS were analysed. In particular, the study shows that it is possible to reduce emissions significantly by increasing the ceiling, while the impact of a simple extension of the scope of the ETS is much more limited.
It concludes that a combination of three measures is needed: strengthening the ceiling, strengthening the market stability reserve and creating a group of pioneering countries to lead the way.
To consult the study: http://bit.ly/2KyEAbj (Original version in French by Aminata Niang)