S&Ds back deal with the Council to fine-tune the ETS market of allowances

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Climate & Environment

Press release

Socialists and Democrats have strongly advocated for the EU Emissions Trading Scheme (ETS) as the flagship of Europe’s fight against climate change and as a crucial tool to help EU industry to adapt to a zero-carbon economy. 
 
The ETS was the first of its kind worldwide and remains the largest international trading system for greenhouse gas emissions globally, covering almost 50% of all greenhouse gas emissions in the EU, Iceland, Liechtenstein and Norway. The ETS caps the total amount of emissions by 11,000 power stations and plants, and allows credits issued under the scheme to be traded. In this way, it has put a price on carbon emissions in the EU. However, until now, the price has been too low and measures are needed to raise the price and make the market more efficient.
 
S&D spokesperson on environment, Miriam Dalli MEP, said:
 
“The EU’s ETS was always aimed at setting a global example in the fight against climate change. As Socialists and Democrats, we always insisted that this reform for the fourth phase of the ETS - which will cover from 2021 to 2030 - is crucial. Hence, our insistence to be more ambitious and do more to address climate change. Hopefully, with a successful transition towards a zero-carbon economy, the allowances in the market will eventually be no longer necessary.
 
“We need to keep up the momentum and make sure that we deliver climate legislations which can actually make a difference. As S&Ds, we will continue advocating for policies that help the EU comply with the Climate Paris Agreement whilst ensuring an effective and fair transition of our industries and a level-playing field with industries abroad.”
 
S&D spokesperson on the ETS, Jytte Guteland MEP, said:
 
“The agreement reached with the Council will greatly help reduce the current surplus in the system by cancelling up to 2 billion allowances over the years to come. We also ensured that no new coal would be financed by the common fund for modernisation. These are important improvements of the main tool at Europe's disposal to the Paris agreement's goals. The agreement also upholds the fundamental principle that all sectors of society must contribute in the fight against global warming, with a clear signal that the maritime sector will also have to do more.
 
“For the S&D Group it has also been crucial to ensure a just transition to a low-carbon society. Whilst Europe accelerates the pace to combat climate change, it is important to avoid social impacts and to ensure that nobody is left behind. Therefore, I am pleased that the ETS will provide specific support for the reskilling and education of workers in carbon-dependent regions in low-income member states. 
 
“We wanted to be more ambitious and set the Linear Reduction Factor (LRF)* at 2.4%, because this would have been in line with our commitments under the Paris agreement, but we could not get the support of the Conservative majority and the factor has been set at 2.2%. However, we managed to introduce a mid-term revision in which we will try to increase the percentage.”
 
*Note to the editors
 
In the current Directive; the LRF stipulates that from 2014 onwards the total quantity of allowances (cap) determined for 2013 should decrease linearly by 1,74 % of the amount of allowances in 2010. Now we propose that the LRF is changed to 2.2% after 2021. The goal is that the overall quantity of allowances will decrease each year resulting in an overall emission reduction of sectors under the EU ETS of 43% by 2030.