MEPs propose tighter ETS rules

19th January 2017


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  • Carbon Trading ,
  • Politics & Economics

Author

Charles Obinor

The European parliament environment committee has backed plans to tighten the EU emissions trading system (ETS) from 2020.

They include reducing the number of allowances to be auctioned each year and doubling the capacity of the market stability reserve (MSR) to absorb excess credits. The European Commission had sought a 2.2% increase in the so-called ‘linear reduction factor’, the yearly contraction in credits available for auction.

MEPs have proposed a 2.4% rise. Under their proposals, when the MSR is triggered from 2019, it would absorb up to 24% of the excess of credits in each auctioning year, for the first four years, which is double the current capacity. MEPs also agreed to remove 800 million allowances from the MSR from 1 January 2021.

Conservative MEP and ETS rapporteur Ian Duncan said: ‘We have endorsed an agreement that honours the EU’s Paris commitments, while also protecting vital industries. The journey has not always been easy but the commitment of my fellow MEPs who negotiated the dossier has been unstinting.’

The committee backed measures to account for emissions from shipping and aviation. MEPs want carbon emissions in EU ports and during voyages to and from them to be accounted for, while revenues from auctioning of allowances in the aviation sector would be used for climate action in the EU and countries outside the bloc.

The proposed legislation will be put to a vote of parliament in February.

Meanwhile, a study for Carbon Market Watch has found that heavy industry in 20 European countries made more than €25bn in ‘windfall profits’ from the ETS between 2008 and 2015. According to the report, iron and steel made €8.4bn, the cement sector €5bn, refineries €4.6bn and the petrochemical industry €1.7bn.


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