EU debates ETS emissions trading reform: Ireland pushes for a deal by year-end

Ambassadors of EU member states (the so-called Coreper) met in Brussels to discuss the overhaul of the ETS emissions trading system, hearing a briefing from Kurt Vandenberghe, a representative of the European Commission's Directorate-General for Climate Action. According to an anonymous source within EU structures, member states agreed to "engage constructively with the proposals," after which the Irish presidency presented its own vision for the reform.

The Environment Working Party already tackled the bulk of the ETS revision on 20 July, and member states were asked to prepare comments on individual proposals over the summer. A political discussion meant to pave the way toward an agreement is scheduled for the meeting of environment ministers in Luxembourg on 12 October.

"We got straight to work on the ETS review and will make sure every member state's position is heard. We need to move quickly on this complex issue — certainty around the ETS is critical for Europe's competitiveness," said a representative of the Irish presidency.

Under the European Commission's published proposals, free allocation of emission allowances will continue beyond 2030, but it will now be more closely tied to investment in decarbonisation. Companies will have to submit and carry out emissions-reduction plans in order to keep receiving this support. The reform also introduces, for the first time, allowance auctions extending beyond 2040. Under the draft, the EU would grant companies 80% of free allowances upfront, provided they submit investment plans for decarbonisation in Europe, with the remaining 20% released once those plans are implemented.

The revamped ETS also envisages a slower reduction of the emissions cap than under current rules. Whereas existing regulations foresaw all allowances being exhausted by roughly 2039, auctions would now continue well beyond 2040. The pace of the cap's decline would slow from today's 4.3% a year to 3.7% annually between 2031 and 2035, and then to just 1.7% a year from 2036 onward. This would keep the trading system functional beyond 2040, but in practice it also means a slower overall reduction in emissions.

The draft also allows the use of international carbon credits between 2036 and 2040, capped at up to 2% of emissions obligations. This would let companies meet part of their obligations through high-quality overseas emission-reduction projects rather than relying solely on purchasing European allowances. The European Commission intends to preserve the ETS's solidarity principle: part of the revenue from allowance sales will continue to support poorer EU countries in their energy transition — a group that still includes Czechia.

Source: ekolist.cz