With negotiations on the reform of the European carbon market set to resume this week, electricity trade body Eurelectric is urging policymakers to finalise talks swiftly on a strengthened EU Emissions Trading System “and ensure legal clarity for European investors”.
“Investors across Europe have been waiting for months to understand what form the EU-ETS will take after 2020,” said Eurelectric secretary-general Kristian Ruby.
“They need certainty to take informed decisions on low-carbon investments. We call on Members of the European Parliament and EU Member States need to reach swift agreement on an ambitious ETS reform.”
The EU-ETS is a cornerstone of the EU’s policy to combat climate change and is also its key tool for reducing greenhouse gas emissions cost-effectively. It is the world’s first major carbon market and remains the biggest.
Eurelectric says the EU-ETS is set to play a key role in ensuring the cost-effective low-carbon energy transition. The power sector has repeatedly called for increasing the level of ambition to ensure a robust carbon price signal under a reformed and strengthened ETS.
Eurelectric is specifically calling for short and long-term measures to strengthen the EU ETS, including: increasing the Market Stability Reserve intake rate from 12 per cent to 24 per cent from 2019 until at least 2023; increasing the LRF to at least 2.4 per cent as soon as possible to guarantee long-term predictability of the system and to bring the EU ETS in line with the EU’s long-term climate objectives.
Eurelectric also supports the cancellation of ETS allowances if it is “carried out in a predictable and rules-based manner, as this can contribute to the long-term predictability and credibility of the system”.
The organisation also said that in order to lower costs for the electricity sector in Member States with lower GDP/capita levels, it supports a proportional increase of the Article 10c derogation of between 40 per cent and 80 per cent and Modernisation Fund of between 2 per cent and 4 per cent.
“It is time we get progress,” said Ruby. “Investors are waiting for policymakers to deliver.”