The French Presidency of the Council of the European Union sent Member States, on Monday 28 March, a document outlining the progress of negotiations in the EU Council on the revision of the EU Emissions Trading System (ETS) and the creation of a ‘Social Climate Fund’, two dossiers in the ‘Fit for 55’ package.
The Presidency firstly notes the persistence of differences of opinion between Member States and concerns “from a large number of delegations” regarding the European Commission’s proposal to establish a second ETS covering greenhouse gas emissions from heating of buildings and road transport (ETS2 or ETS-BRT).
As the last meeting of the Member States’ Environment Ministers (‘Environment’ Council) on Thursday 17 March showed (see EUROPE 12913/15), the main reason for the opposition of a majority of Member States to ETS2 is the social costs it would generate. Some ministers had also expressed doubts about the environmental effectiveness of the instrument.
“Several delegations have expressed their willingness to rework the Commission’s proposal, in particular to mitigate the impact on prices and consumers and to improve the acceptability of such a scheme”, the French document therefore states.
Some delegations proposed a more gradual introduction of requirements for the buildings and road transport sectors or a postponement of the date of application of the ETS2, while other delegations proposed that the revenue generated by the new ETS be returned to the Member States.
This last point is directly related to the ‘Social Climate Fund’ (SCF) which, according to the Commission’s proposal, would be financed by 25% of the revenues from ETS2 and would be used to compensate for the potential social impacts of the latter (see EUROPE 12762/6).
Concerning the SCF, the French Presidency noted that “several delegations expressed their opposition to or scepticism about the creation of the Social Climate Fund, stating that there were other budgetary instruments that could be mobilised and that the Multiannual Financial Framework should not be reopened”.
While some delegations wanted the revenues from ETS2 to be returned to the Member States, several EU countries indicated that the establishment of the SCF should be conditional on the creation of ETS2, the document further underlines.
It also said that many delegations indicated that they could support the idea of the SCF in principle, but wanted to rework its parameters (allocation method, size of the fund, co-financing rate, management method, etc.), in particular to take better account of the social and geographical specificities of the Member States.
The French document will be discussed by the Member States’ ambassadors to the EU (Coreper) on Friday 1 April. During this meeting, delegations will be invited to express their views on a European Commission non-paper which aims to present the consequences of not establishing ETS2, both in terms of CO2 emissions and social and economic costs (see EUROPE 12913/16).
See the document (in French): https://aeur.eu/f/10s (Original version in French by Damien Genicot)