Dear Environment Minister,
Ahead of the upcoming trilogue meeting on the revision of EU’s Emission Trading System (ETS), the undersigned, representing 30 networks and organizations representing citizens from across Europe, would like to urge you to ensure that the funding mechanisms dedicated to help lower-income Member States transform their energy systems (article 10c and the Modernization Fund) are robust and well-designed to truly support the development of renewable energy and energy savings instead of subsidizing coal plants.
If the EU wants its policies to be consistent with the long-term objectives of the Paris Agreement, it needs an ambitious ETS with a strong price signal. In addition, it cannot continue to subsidize coal power plants. We therefore call on you to support proposals that:
1. Exclude investments in coal power under Article 10c particularly through supporting a 450gCO2/kWh investment eligibility criterion.
Article 10c is a transitional mechanism aimed at supporting the transformation and diversification of our energy systems. However, currently a vast majority of up to €12 billion investments through article 10c finance the expansion of fossil fuel capacity in Central and Eastern Europe (CEE), including hard coal and lignite. Allowing for these funds to continue subsidizing coal and lignite will have detrimental impacts on both the climate and public health. Furthermore, it will hinder the transition to an economy that is highly efficient and truly based on renewables. Article 10c should be used to shift more investments to energy efficiency and renewable energy sources.
2. Exclude investments in coal power and secure strong governance of the Modernisation Fund with a balanced role for all Member States (both beneficiary and non-beneficiary) as well as the European Investment Bank (EIB) in setting out investment guidelines for projects.
Just as Article 10c, the Modernization Fund should not subsidize coal power in order to avoid dangerous lock in to coal for the coming decades. This can be accomplished by adopting either the 450 gCO2/KWh investment eligibility criterion proposed by the European Parliament or by maintaining the text included in the “general approach” agreed on February 28. Moreover, a the Modernisation Fund comes from a collective funding basis that represents European resources, it must be collectively managed. The European Investment Bank should have a decisive role in the selection of projects to benefit from the Fund. Day to day management must be in the hands of an independent management committee, with expertise on project development and finance. Strict monitoring tools should be put in place, and deterring penalties for countries manipulating the Fund should be foreseen.
3. Support establishing a Just Transition Fund
Some low income communities and regions will need support to transition away from coal. It is therefore essential to establish a Just Transition Fund, in order to ensure that no one is left behind in the transition to a safe, clean and mutually prosperous Europe.
We hope that you will show your support to the above ahead of the upcoming trilogue meeting.