The European Commission will take measures "within a few days" to update the free allocation benchmarks in the Emissions Trading System (ETS) and provide a Reserve of market stability to reduce carbon price volatility, Commission President Ursula von der Leyen said.
The adjustment of the baseline indicator will "take into account industry concerns," she said after the European Council meeting ended after midnight on Friday, Kallanish said.
In the medium term, the Commission will work on a review of the ETS, which will include a "more realistic trajectory" for providing free benefits to industries after 2034.
It also proposes the "ETS investment incentive," a fund of 30 billion euros ($35 billion) funded by ETS grants of 400 million intended to finance decarbonization projects. This will be done on a first-come, first-served basis, with priority given to financing low-income Member States.
The European Council said the review should take place no later than July and should include measures to reduce carbon price volatility and mitigate its impact on electricity prices. But this requires maintaining the "essential role of ETS in climate and energy change through a market-based carbon price signal that drives investment and innovation."
With regard to energy prices, the Commission will prepare a legal proposal to improve the performance of the network infrastructure and allow member states to reduce network charges for energy-intensive industries – they average about 18% in the EU.
It will also be proposed to set lower tax rates on electricity to ensure a lower tax on electricity than on fossil fuels.
Ahead of Friday's meeting, ten EU countries, including Italy, Poland and Austria, called on the European Commission to postpone consideration of the ETS until May. Major steel companies such as Federacciai, voestalpine and Moravia Steel have been calling for the modernization of the ETS in recent months to reduce the burden on the industry. Polish President Karol Nawrocki called for its complete abandonment.
Author: Adam Smith
Kallanish.com
