ETS

EU's Emissions Trading Scheme

 

The EU Emissions Trading Scheme (EU ETS) is the world’s largest carbon market, covering more than 11 000 industrial and power plants in the EU-28, as well as in Iceland, Liechtenstein and Norway. The EU ETS covers about 40% of the EU’s greenhouse gas emissions.

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The EU ETS sets a limit on the amount of greenhouse gas emissions that can be emitted. Companies covered by the EU ETS receive or buy pollution permits – called EU allowances. One EU allowance allows for one tonne of CO2 to be emitted. The cap becomes slightly more stringent every year so that total emissions decline over time to minus 21% in 2020 and to minus 43% in 2030 from 2005 levels.

The ETS aims to help the EU achieve its emissions goals more cost-effectively and to catalyze investments in energy efficiency and renewable technologies. Despite being hailed as the flagship of European climate policy, the EU ETS has failed to deliver on these objectives. A weak reduction target and the massive use of international offsets have led to the build up of and enormous surplus of emission allowances. Therefore, the price for allowances has dropped so much that it no longer drives change. The reforms that have been passed (see the Market Stability Reserve) are not enough to fix the ETS.

EU decision makers are currently discussing ETS reforms for the period 2021-2030.

Read more about what already happened here

Trialogue

Negotiations between the European Commission, Council and Parliament start now that both the European Parliament and the Council have their positions. 

CAN Europe calls for more ambition

Absent reforms that go well beyond what has been proposed so far, companies can delay or cancel investments in cleaner and more efficient production. The sectors that cause almost half of the EU´s greenhouse gas emissions could continue polluting at business-as-usual levels for the next 10 years or longer. This risks a lock-in of carbon intensive infrastructure for years to come, making Europe’s climate goal more time-consuming and costly to achieve.

Last but not least, even if the reforms were to be bold and swift we will need other strong policies, such as for renewable energy and energy efficiency, and binding bioenergy sustainability criteria, see Why a price on carbon cannot fix everything.

 

Learn more

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CAN Europe Position on Essential ETS Reforms for post-2020

CAN Europe ETS reform position for post-2020 contains detailed recommendations. Read More

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Outcome of the European Plenary Vote of the ETS Reform

In terms of ambition, the results of the vote on 15.2.2017 is a clear betrayal of the Paris Agreement. Read More

Summary of the Environment Council agreement on the ETS reform

The Council position goes further than the European Parliament’s, but it still falls dramatically short of aligning the ETS with the Paris Agreement. Read more

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Why a price on carbon cannot fix everything

Some market fundamentalists make that a simple price on carbon (ie an ETS) can fix everything. This is simply wrong, has been proven wrong by many studies and it will remain wrong no matter how often this myth is repeated. Read More 

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Carbon leakage: industry subsidies, windfall profits instead of climate action

The success of the ETS revision hinges on its ability to make the polluter pay, rather than paying the polluter. Handing out free pollution permits contradicts the EU Treaty principle that polluters should pay. Read More 

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ETS Market Stability Reserve

The Market Stability Reserve (MSR) temporarily removes soem of the ETS surplus from the market. Read More

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Useful ETS Resources

Here you find a range of useful external ETS resources. Read More

 

Contact

Klaus

Klaus Röhrig in Brussels
EU Climate & Energy Policy Coordinator
klaus /at/ caneurope.org
+32 2893 0839

Latest Publications on Emissions Trading Scheme

  • EU fails to deliver on Paris Agreement by setting its carbon market for another decade of failure

    Today the EU institutions reached an agreement on the redesign of one of the bloc’s key climate policies, the Emissions Trading Scheme (ETS).
  • Joint NGO statement on the ETS revision

    Being serious about the Paris Agreement:Stop the ETS funding coal, Start a meaningful carbon price This Agreement [...] aims to [...] making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. Paris Agreement, Article 2(1)c We, the undersigned, urgently appeal to Representatives of European Parliament, Council and the European Commission to ensure that European power and industry are put on the right track to rapidly and cost-effectively reduce their carbon emissions. The European Union was instrumental in designing the Paris Agreement. Now it must implement it. On 8th November, the aforementioned decision-makers will discuss final changes to the EU Emissions Trading System (ETS) for the post-2020 period. It is vital that these changes enable the ETS to help deliver the Paris commitments. The recently published UNEP report underlines the urgency to act now in order to ensure that the 1.5°C target remains attainable [1]. One important discussion topic will be the design of the ETS funds. It is crucial that ETS funds stop subsidizing coal plants. We are glad to see that the European Parliament as well as seven Member States [2] have called for ending this misuse of funds. To reach the “well below two degrees” goal agreed at Paris, the International Energy Agency’s (IEA) modelling shows that unabated coal in Europe must fall to zero by 2030: This means that the ETS must no longer fund this obsolete and polluting technology and needs to accelerate a socially just transition instead. The second crucial topic is how to ensure a meaningful carbon price that drives decarbonisation throughout the 2020s and beyond. This can only happen if the cap on the ETS emissions continues to tighten in line with the Paris climate goals, and is adjusted downwards to account for progress. Without this change, the EU carbon market will remain on an inadequate decarbonisation trajectory and risks another decade of irrelevance, leaving the EU lagging behind on green growth and innovation. Fundamentally, the EU ETS must ensure a meaningful carbon price in line with the Paris climate goals, while at the same time stop subsidizing high-carbon intensity technologies such as coal. We count on your support. Kind regards, Carbon Market WatchCEE Bankwatch NetworkCenter for Transport and EnergyChange PartnershipClimate Action Network (CAN) EuropeEfdeN RomaniaInternational Young NaturefriendsSandbagWWF EPOYoung European Federalists11.11.11 Notes: [1] Under current trends, it is expected that in 2030 global efforts to remain on a 1.5°C pathway are 16 to 19 GtCO2 off track. UNEP (2017). The Emissions Gap Report 2017. Available here. [2] Non-paper by Denmark, France, Germany, Luxembourg, the Netherlands, Sweden and the UK Joint NGO statement on the ETS revision
  • Poland wins Fossil of the Day Award at the Bonn climate summit

    On the second day of this year’s UN climate summit in Bonn, Poland won the second place of the shameful Fossil of the Day Award. The dubious award was handed down to Poland, the host of the next UN climate summit in 2018, for working day and night to turn the EU’s carbon market into potentially the largest coal subsidy scheme in history.
  • ETS trilogue process relaunched under new rapporteur

    What’s the situation?On Tuesday, 27 June, representatives of the European Parliament, the Council and the Commission met for their second trilogue meeting to discuss diverging positions on the reform of the EU Emissions Trading Scheme (ETS). There has been little progress as discussions mainly focused on addressing outcomes of technical working group meetings and more controversial topics are most likely tackled at the next trilogue around 10 July.
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