Contact: Katie Kouchakji, email@example.com
BRUSSELS, 15 July – IETA welcomes today’s publication by the European Commission of its legislative proposal to revise the EU ETS Directive to reflect political agreements reached over the past 12 months.
The Commission’s proposal will enshrine the emissions trading elements of the bloc’s 2030 climate and energy package, as agreed in October 2014. The proposal includes the target to reduce overall EU emissions by at least 40%, compared with 1990 levels. The legislative package helps set a predictable framework for investors and business, says IETA.
IETA is pleased that the proposal addresses concerns about competition with businesses in non-carbon constrained jurisdictions. In particular, IETA welcomes the proposal to use up to date production data to determine the allocation of free allowances – although closer inspection of the rules to tackle the risk of carbon leakage is needed to understand the consequences for market participants in different sectors.
“We welcome this step in bolstering the EU ETS for the future, knowing that Europe’s leaders are looking to its 10-year old market to continue to play a central role in the region’s climate response,” says IETA President and CEO Dirk Forrister. “Enshrining the long-term target in law gives business the certainty and predictability needed to plan investments.”
However, IETA remains concerned that closing the door to the use of carbon offset credits from developing countries will lead to higher prices for European businesses and risks stymieing efforts to encourage wider participation in global carbon markets.
“International credits have a role to play in meeting Europe’s wider emission reduction goals. We firmly believe that the option to use them should be preserved,” says Sarah Deblock, IETA’s Director of European Policy.
“IETA members have put forward strong proposals on the use of auction revenues to support climate action in developing countries, which could include the purchase high-quality offsets. This would help all nations to play a role in the climate change response, and we are encouraged to see the European Commission proposing that member states reinvest carbon auction revenues to finance climate action in third countries.”
Deblock adds: “IETA looks forward to engaging with Members of the European Parliament and European Member States in the coming months on finding ways to ensure the revision of the Directive works towards strengthening the role of the EU ETS in Europe’s climate strategy.”
Earlier this week, IETA released a paper examining policies that overlap with the EU ETS and recommendations to mitigate this risk.