European Parliament approves EU ETS change

A reform of the EU Emissions Trading Scheme has reached an informal agreement with the Latvian Presidency of the Council. This has been endorsed by Parliament. The reform is intended to reduce the surplus carbon credits available for trading in order. This is with a view to offering support to the reduction of surplus carbon credits to reduce emissions rights. The scheme will begin in 2019.

The new law creates a system which will take a proportion of ETS allowances off the market. It will place it in reserve if the surplus exceeds a certain threshold. “Backloaded” allowances (900 million) will be withdrawn from the market until at least 2019 and will be placed in reserve.

Ivo Belet, who was key in securing the legislation through parliament said:

“The Market Stability Reserve (MSR) is an efficient, market-driven tool that will stabilise our ETS system and thereby save the central pillar of Europe's sustainability and climate policy. MSR is a crucial building block to help ensure that CO2-prices spur innovation in the field of energy efficiency. This reform puts Europe on the right track to achieve its ambition of 40% less CO2-emissions by 2030.” “For energy-intensive industries (steel, chemicals, glass, etc.) achieving less CO2- emissions is a daunting task and requires important investments. We need to ensure sufficient guarantees to these companies to prevent them from delocalising their production facilities to countries outside the EU that have less stringent climate policies (‘carbon leakage’). This will be a crucial element in the next step of the ETS reform which the European Commission will present next week.”