Reformed EU Emissions Trading System approved

28 February 2018

The revision of the EU Emissions Trading System (EU ETS) for its next phase (2021-2030) was approved by the Council of the European Union yesterday. Foratom, the European nuclear trade body, welcomed the reform but said more must be done to decarbonise Europe's economy.

The EU ETS was launched in 2005 and operates in 31 countries - all 28 EU countries, plus Iceland, Liechtenstein and Norway. It is designed to limit greenhouse gas emissions from more than 11,000 heavy energy-using industries (power plants and manufacturing facilities) and airlines operating between these countries. It covers about 45% of the bloc's GHG emissions.

A centrepiece of the EU's 2030 energy and climate policy framework is the binding target to reduce overall GHG emissions by at least 40% below 1990 levels by 2030. To achieve this cost-effectively, the sectors covered by the EU ETS will have to reduce their emissions by 43% compared with 2005, while non-ETS sectors will have to reduce theirs by 30%.

The European Commission published its proposal in July 2015 to revise the directive on the EU ETS for the 2021-2030 period. Its proposal for a market stability reserve (MSR), adopted in October that year, takes 12% of the surplus allowances out of the market from the beginning of 2019.

Yesterday the Council of the European Union approved revisions to the ETS. These introduce a 2.2% reduction on the cap on the total volume of emissions, as well as a temporary doubling of the number of allowances to be placed in the MSR until the end of 2023. A new mechanism to limit the validity of allowances in the MSR above a certain level will also become operational in 2023.

Foratom welcomed the revision to the ETS, but said more should be done if the EU wants to restore confidence in the EU ETS as its main driver for decarbonising the European economy in an affordable way.

Foratom Director General Yves Desbazeille said: "The revision of the EU ETS is a step in the right direction as it should enhance cost-effective emissions reduction. However, it may not be enough to boost the development of all low-carbon technologies in the EU or fully align the system with the conclusions of the Paris Agreement."

He added: "The EU ETS should be spearheading the switch from fossil fuels to low-carbon energy sources, including nuclear energy. If the necessary investments are to be incentivised, the carbon price needs to increase significantly, starting now. Without it, the EU will fall short of fulfilling its climate goals."

Foratom called for the European Commission to ensure that there are no overlaps with other EU and national climate policies when introducing the revised EU ETS. Priority should be given to the EU ETS and overlapping policies discouraged, it said.

The formal approval of the Council marked the final step in the legislative process. The new directive will enter into force on the 20th day following its publication in the Official Journal.

Researched and written
by World Nuclear News