The EU is considering extending free ETS benefits to industries investing in Europe
The European Commission is preparing to propose changes to the European Union's Emissions trading System (ETS) that would expand the allocation of free emissions quotas to industrial sectors in exchange for commitments to invest within the EU, according to an internal Commission document seen by Reuters.
The ETS is the EU's main mechanism for reducing carbon dioxide emissions, which requires industrial enterprises, electricity producers, shipping companies and airlines to acquire permits for greenhouse gas emissions.
The free allowance is related to the competitiveness of the problem
Energy-intensive industries currently receive a portion of their emissions allowances free of charge to help them stay competitive on producers in regions with non-comparable carbon costs.
Although the EU had previously planned to phase out free distribution as part of its decarbonization strategy, pressure from a number of industries and member States led to consideration of maintaining support measures aimed at protecting the competitiveness of European producers.
The European Commission is expected to submit its proposal for the revision of the ETS on July 15. According to the document, the revision will also require EU member states to allocate a larger share of ETS revenue to support decarbonization of industries covered by the system.
A broader review of the ETS mechanisms is planned.
This revision is also expected to include a more complete change in the structure of the Market Stability Reserve, the mechanism used to regulate the supply of emission allowances and reduce price volatility. This follows a number of more limited adjustments proposed by the Commission earlier this year. The document states that the revised system will simplify ETS compliance requirements for shipping operators and airlines.
Other key elements of the system, including the innovation component, expect the D program, which funds low-carbon technologies, and the mechanism for distributing 10 percent of ETS revenue to low-income EU member states to remain unchanged.
Author: Stilorbis
Steelorbis.com