Saturday

21st Apr 2018

MEPs agree on future of emissions trading

  • Companies with installations have to hand in ETS credits for polluting. MEPs agreed on ETS rules for 2021-2030 (Photo: Otodo)

The European Parliament raised the bar on the EU's climate change commitments, after its environment committee on Thursday (15 December) broadly backed a more ambitious reform of the Emissions Trading System (ETS).

The proposal was adopted with 53 votes in favour, five against, and seven abstentions, and followed extensive negotiations between political groups over compromise amendments.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The ETS is the bloc's flagship tool for reducing greenhouse gas emissions by at least 40 percent to 2030, but it has been plagued by consistently low prices for carbon credits.

The reform is aimed at jacking up the price by making the carbon credits, or allowances, more scarce over time.

Companies with heavy industrial installations need to annually hand in carbon credits, or allowances, for every tonne of CO2 they emit.

Leading MEPs were elated after the vote.

"Today's vote gives us a clear mandate for further negotiations with the council," conservative ECR group's Ian Duncan, rapporteur for the file, told EUobserver after the vote.

The reform needs approval from both the parliament's plenary and the EU Council, where national governments meet.

"It's a strong signal to the world that we are ready to live up to our commitments under the Paris Agreement," Swedish MEP Jytte Guteland, responsible for the report on behalf of the centre-left S&D group, added.

The price for emitting a tonne of CO2 stood at some €5 on Wednesday, while many experts think a price of around €30 is needed to persuade industrial companies to switch to cleaner energy sources.

The reform is the first major legislative file on fighting climate change since world leaders agreed the first-ever global climate treaty in Paris last year.

Reducing the available credits

The package is based on three key components.

A main issue of contention was the linear reduction factor (LRF), which says by how much the number of available carbon credits should decrease each year.

The parliament decided to raise the LRF from 2.2 percent, as suggested by the commission, to 2.4 percent. "This will allow to raise the price of a unit from €5 to €25," Guteland said.


It changed the distribution of carbon permits among the 13,000 companies working under the scheme, reducing in particular many of the privileges given to the cement industry.

It also set up a Just Transition Fund, which will help minimise social costs of the transitions towards a green economy.

"I very strong believe in climate policy and its capacity to generate green jobs, but some can feel insecure about the transition. The fund will help to prevent inequalities," Guteland said.

EPP objections

ETS is the world's first, and largest, carbon permit market.

The most controversial point of the report was the LRF, which was raised despite the objections of the centre-right EPP group, raising concerns about the support for the deal at later stages of the process.

"But in the end, the EPP also voted for the report, and the cap is just a small part of the deal," Ian Duncan said.

'Pretty ambitious' deal

European Commissioner on Energy Union, Maros Sefcovic, spoke to a handful of journalists in Brussels ahead of the vote.

He said the compromise deal that was on the table in Strasbourg was “pretty ambitious”.

Sefcovic also noted he was “very optimistic” that MEP negotiations with the national government, needed for the new ETS rules to come into force, will be wrapped up next year.

“We have to remember we are preparing the system for the period between 2021 and 2030, so I think we will definitely manage,” said the Slovak commissioner.

He noted that it was widely recognised that the emissions trading system was “technically fine”.

“But of course, €5 per tonne is not a price which can drive innovation and phase out the most polluting fuels. Something must be done.”

Next: China

Sefcovic met with journalists alongside Christiana Figueres, former top climate diplomat for the United Nations.

She also said she saw consensus “that putting a price on carbon is and would be the most effective policy” to reduce greenhouse gas emissions.

“When you put a price on anything, you are disincentivising. And that's what we want to do. We want to disincentivise any carbon-intensive energy uses,” said Figueres, who until July chaired the UN Framework Convention on Climate Change.

She noted that Europe's emissions trading system has inspired other nations in the world to also adopt a similar scheme.

Most notably, China will introduce its ETS next year.

“Once we have a price of carbon in China, you have to understand that what that means is that there is an embedded price in almost everything that we use,” said Figueres, noting that many of our consumer goods are made in China.

“There is going to be an embedded price on carbon in a huge portion of the global economy. That is going to have a ripple effect throughout the rest of our economies.”

EU carbon credits drop below €6

Has EU's flagship climate tool still an influence on moving industry away from fossil fuels? Emitting a tonne of carbon dioxide in Europe has become 25 percent cheaper since the start of 2016.

Opinion

More commitment to renewables from Council, please

More and more consumers are likely to invest in solar panels in the future as it becomes simpler to produce one's own electricity, writes Monique Goyens, director general of BEUC, the European Consumer Organisation.

Magazine

A sustainable death wish

No one can escape death. But choices over how one's body is disposed of could either lessen or increase your carbon footprint.

News in Brief

  1. Audit office: Brexit 'divorce' bill could be billions higher
  2. MEPs urge better protection for journalists
  3. Dieselgate: MEPs back greater role for EU in car approvals
  4. European parliament adopts new organic farming rules
  5. EU granted protection to half million people in 2017
  6. Report: Facebook to carve 1.5bn users out of EU privacy law
  7. Greek court ruling permits migrants to travel to mainland
  8. Commonwealth summit hopes for trade boost after Brexit

Stakeholders' Highlights

  1. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  2. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  3. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  4. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  5. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  6. UNICEFCalls for the Protection of Children in the Gaza Strip
  7. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  8. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  9. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  10. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  11. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  12. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia

Latest News

  1. ECJ ruling set to end 10-year 'mouth tobacco' lobbying saga
  2. Whistleblowers, Syria and digital revolution This WEEK
  3. MEP friendship groups offer 'backdoor' for pariah regimes
  4. Macron and Merkel pledge euro reform
  5. Obscurity surrounds EU military fund's expert groups
  6. New EU party finance rules short circuit accountability
  7. Draghi to stay in secretive 'lobby' group
  8. Bulgaria offers lesson in tackling radical-right populists

Stakeholders' Highlights

  1. Mission of China to the EUChina and EU Must Work Together to Promote Global Steel Sector
  2. Swedish EnterprisesEU Tax Proposal on Digital Services Causes Concern for Small Exporting Economies
  3. Europea Jewish CongressCondemns the Horrific Murder of Holocaust Survivor Mireille Knoll in Paris
  4. Mission of China to the EUAn Open China Will Foster a World-Class Business Environment
  5. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  6. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  7. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  8. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  9. Martens CentreEuropean Defence Union: Time to Aim High?
  10. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  11. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  12. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights