EU ETS Review Proposal: IETA's Initial Comments

The proposal seeks to align the ETS with the EU's 2040 climate target while addressing competitiveness, investment, energy security and industrial decarbonisation. It includes reforms to the Market Stability Reserve, provisions for carbon removals and international credits, new industrial support mechanisms, and measures aimed at providing greater clarity on the interaction between the EU ETS and CORSIA.

IETA's 𝗶𝗻𝗶𝘁𝗶𝗮𝗹 𝗰𝗼𝗺𝗺𝗲𝗻𝘁𝘀 𝗼𝗻 𝘁𝗵𝗲 𝗘𝗨 𝗘𝗧𝗦 𝗿𝗲𝘃𝗶𝗲𝘄 𝗽𝗿𝗼𝗽𝗼𝘀𝗮𝗹
“The proposal represents a far-reaching evolution of the EU ETS and appears to move towards the more integrated post-2030 vision that IETA has called for. Adapting the Market Stability Reserve to the realities of a tightening cap and a changing market was a fundamental part of that exercise. The presentation of the review alongside the Electrification Action Plan is also significant at a time when energy prices and energy security are critical to both Europe’s internal economic resilience and its international competitiveness.

We are assessing carefully how the different elements interact and what they mean for market predictability and the long-term investment signal. A clear, rules-based framework will be essential to mitigate the risk of political intervention and ad hoc measures, and to provide market participants with the confidence needed to invest.

The proposals on carbon removals and international credits mark a move in the right direction, but further work will be needed. For international credits, early preparation on governance and procurement, and greater certainty around a pilot from 2031, will be essential to establish a credible demand signal. On removals, the proposal begins to create compliance-driven demand, but a broader pathway for CRCF units will be needed to unlock deployment at scale.” Aurora D'Aprile, EU Policy Director - IETA 

"On aviation, the proposal is an important step towards providing needed clarity on the future relationship between the ETS and CORSIA. IETA remains committed to supporting CORSIA as the global market-based measure for aviation and looks forward to reviewing the proposal to assess how the two schemes will interact. A stable, well-designed relationship between the EU ETS and the global CORSIA scheme can avoid policy fragmentation and give airlines and investors the certainty they need to plan long-term abatement." - William Gifford, Aviation Lead - IETA 

Read our vision for the post-2030 EU ETS here.