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BRUSSELS, 13 September – EU negotiators made progress tonight in talks to strengthen the bloc’s carbon market, a development which will build confidence in the long-term operations of the system, says IETA.
Representatives from the European Parliament, the Council and the European Commission reached a conditional agreement on doubling the rate at which surplus emissions allowances will be removed from the market and placed in the Market Stability Reserve during the first five years of operation – a proposal which IETA supports.
To address competitiveness concerns of trade-exposed industries, EU leaders also made progress on a set of measures: dynamic allocation, maintaining the current list of sectors at risk of “carbon leakage” until 2020, and rules for carbon leakage assessment at sectoral level.
Negotiators also reached a provisional compromise to allow Member States to cancel allowances voluntarily when other national measures cause electricity generators to shutter, adding surplus to the carbon market. This aims to address the concern raised by IETA and other business groups about the need to address market impacts caused by overlapping policies.
IETA welcomed tonight’s breakthrough, which came after several months of stalemate in the negotiations. Several issues still remain under discussion and the negotiations are not yet finalised, with further talks scheduled for 12 October.
“The progress achieved is a welcome step towards enhancing the effectiveness of the EU ETS,” says Julia Michalak, IETA’s Director of EU Policy. “Parties should seize the momentum to bring the negotiations on EU ETS reforms to a swift conclusion. We urge European policymakers to accelerate their negotiations and finalise the EU ETS reform process well ahead of the UN climate talks in Germany in November.”
She adds: “European businesses need certainty and clarity, and they need these sooner rather than later. Business plans and financial decisions are already being made for beyond 2020, which will be impacted by these reforms.”