EU plans post-2020 ETS

29th July 2015

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  • EU


Alexandra Pepper

The number of free allowances available under the EU emissions trading system will decline by 2.2% a year from 2021, although the quantity that will be auctioned will remain the same.

These measures are contained in legislative proposals from the European commission for phase four of the system.

The commission claimed the plans would safeguard the international competitiveness of industry sectors in Europe that are most likely to move production outside the EU to countries with less robust rules on emissions.

Under the proposals, industries covered by the system will receive 261 million fewer allowances between 2021 and 2030, according to analysts at Thomson Reuters Point Carbon.

Business groups said the measures failed to protect industries at risk of carbon leakage. Gareth Stace, director at trade body UK Steel, described the proposals as another flawed solution to the competitiveness issues the ETS causes for the industry. “This smacks of two steps forward and one step back. The ETS’s carbon leakage measures are meant to address this by ensuring the best-performing plants are given all the ETS allowances they need for free. But neither the current measures nor the commission’s new proposals live up to this promise.”

Point Carbon has revised upwards its forecasts for allowances ahead of the start of phase four after the commission released its plans. The analysts now expect prices to average €17.30 in 2019 and €18.30 in 2020.

Raising allowances is a key aim for the commission. They are currently trading at around €8, compared with €30 in 2008. Sandrine Dixson-Declève at CISL, said: “It’s the level of the price that will make or break of the ETS over the next 10 years – we’re yet to be convinced that [the commission’s] proposal will go far enough to secure the much-needed high prices.”


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