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"Landmark" deal reached on EU Emissions Trading System post 2020

The European Parliament and Council have reached a provisional agreement to revise the EU Emissions Trading System (EU ETS) for the period after 2020. According to a statement, this revision will contribute to putting the EU on track to achieving a significant part of its commitment under the Paris Agreement to reduce greenhouse gas (GHG) emissions by at least 40 percent by 2030.

A political agreement on the EU ETS post-2020 has been reached between the European Parliament and European Council.

The agreement between the European Parliament and the European Council provides a clear outcome after more than two years of intensive negotiations, following the Commission’s proposal to revise the EU ETS in July 2015.

Today’s landmark deal demonstrates that the European Union is turning its Paris commitment and ambition into concrete action. By putting in place the necessary legislation to strengthen the EU Emissions Trading System and deliver on our climate objectives, Europe is once again leading the way in the fight against climate change. This legislation will make the European carbon-emissions market fit for purpose. I welcome in particular the robust carbon leakage regime that has been agreed and the measures further strengthening the Market Stability Reserve, said Miguel Arias Cañete, Commissioner for Climate Action and Energy.

The EU Emissions Trading Scheme puts a cap on the carbon dioxide (CO2) emitted by more than 11 000 installations in the power sector and energy-intensive industry through a market-based cap and trade system.

Building on the Commission’s proposal, the main improvements agreed by Parliament and Council include:

  • Significant changes to the system in order to speed up emissions reductions and strengthen the Market Stability Reserve to speed up the reduction of the current oversupply of allowances on the carbon market;
  • Additional safeguards to provide European industry with extra protection, if needed, against the risk of carbon leakage;
  • Several support mechanisms to help the industry and the power sectors meet the innovation and investment challenges of the transition to a low-carbon economy.

Following the political agreement, a ‘trilogue’ negotiation between the European Parliament, the Council and the Commission, the text will have to be formally approved by the European Parliament and the Council. Once endorsed by both co-legislators, the revised EU ETS Directive will be published in the Official Journal of the Union and enters into force 20 days after publication.

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