IETA publishes recommendations on the EU ETS Review proposal

IETA has published its recommendations on the European Commission’s proposal for the review of the EU Emissions Trading System (EU ETS). They set out the strengths of the proposal that should be preserved and the targeted improvements that would strengthen the framework.

IETA welcomes the proposal, which provides a strong basis for the next phase of the EU ETS and for aligning the system with the EU’s post-2030 climate and industrial objectives. IETA supports its emphasis on predictable, rules-based governance and broad market participation, its opening towards international carbon markets, stronger support for industrial decarbonization and the foundations to scale up carbon removals.

IETA encourages co-legislators to treat the reform as one coherent package and to maintain its ambition. Preserving confidence in the EU ETS throughout the legislative process will be critical.

Key recommendations include:

• developing the framework for international credits in advance, with earlier clarity on the 2031–2035 pilot phase, eligibility rules and procurement
• decoupling the post-2036 Linear Reduction Factor from the 2033 assessment of international credits, with a clear EU commitment to procure the credits needed
• broadening eligibility for carbon removals, starting with biochar, and bringing the 2034 review forward to before 2030
• increasing the share of ETS1 revenues dedicated to decarbonizing ETS1 sectors beyond 50%, and making the Industrial Decarbonization Bank operational as soon as possible
• keeping baseline free allocation unconditional for sectors exposed to carbon leakage, and removing or fundamentally redesigning the proposed 80/20 mechanism
• avoiding double payment and unnecessary regulatory overlap between the EU ETS and CORSIA
• advancing EU–UK ETS linking as soon as possible

Read the full report now.