EU Commission plans to revise the EU emissions trading system

The European Commission presented a legislative proposal to revise the EU emissions trading system (ETS) for the period after 2020, in line with the 2030 climate and energy policy framework and the Energy Union strategy. This is the first legislative step in delivering on the EU's target to reduce greenhouse gas emissions by at least 40 % domestically by 2030.

The EU Emissions Trading System (ETS) is Europe's flagship tool for tackling climate change and to place the EU on track towards a low-carbon economy. The Commission's proposal sends a powerful signal to the international community in the run-up to the Paris climate summit this December.

The proposal comes at a critical time when other major players such as the G7 and China have also shown their firm determination. The Commission revised the Emissions Trading System to ensure that it remains the most efficient and cost-effective way to cut emission in the decade to come.

Ambitious climate action creates business opportunities and opens up new markets for innovation and the use of low-carbon technologies. The proposed more targeted approach aims at safeguarding the international competitiveness of industry sectors that are at the greatest risk of seeing their production relocated outside the EU to less Green House Gas constrained jurisdictions as well as in pushing energy investment toward innovative and cleaner alternatives.

Further, the Commission proposes that revenues from the emission trading are used by Member States to finance actions to help third countries adapting to the impacts of climate change.

How to achieve?

To achieve the 40 % EU target, the sectors covered by the EU ETS will be reducing their greenhouse gas emissions by 43 % compared to 2005. To this end, the Commission proposes:

  • Increasing the pace of emissions cuts after 2020,
  • More targeted carbon leakage rules to safeguard the international competitiveness of the sectors most at risk of relocating their production outside the EU,
  • Several support mechanisms to help industry and power sectors meet the innovation and investment challenges of the low-carbon transition.

The proposal will guarantee that the EU ETS, Europe's flagship tool to fight climate change, will contribute to deliver steady emission reductions in the decade to come. Cutting emissions also benefits citizens' health through reduced air pollution and makes Europe less dependent on imported fossil fuels.

But there are also critical voices on the Commission's proposal.

(Source: European Commission)

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