EU Commission to host meeting on EUA allocation haircut

Published 15:53 on February 2, 2016  /  Last updated at 15:55 on February 2, 2016  /  EMEA, EU ETS  /  No Comments

The European Commission will host a technical EU ETS discussion in Q2 assessing whether the Cross-Sectoral Correction Factor (CSCF) will be necessary after 2020.

The European Commission will host a technical EU ETS discussion in Q2 assessing whether the Cross-Sectoral Correction Factor (CSCF) will be necessary after 2020.

In a note on its website, the Commission called the meeting as several analysts have had time to examine the issue since the proposal came out in July 2015.

“The aim of the expert meeting is to take stock of the analysis, examine the assumptions behind various forecasts and identify the most critical design parameters to avoid or minimise the need for a correction factor,” it said.

The meeting, for which a date has yet to be set, is invitation-only but will also be webstreamed.

The CSCF applies a uniform haircut of free allocations and is triggered if those entitled to free units under the EC’s carbon leakage rules exceeds the amount available.

It has applied since 2013 and is opposed by industry groups because it means even the cleanest, most efficient plants do not get all of their EUAs for free.

The Commission’s post-2020 reforms are intended to allocate free units more selectively, but while analysts initially expected it would be triggered from the mid-2020s, some now forecast that it won’t be used at all.

ICIS Tschach Solutions said on Tuesday that the CSCF will not take effect for the whole of the fourth trading phase (2021-2030), while Thomson Reuters Point Carbon analysts expect it to be required only in 2030, if at all.

Lawmakers last month begun discussions on whether to amend the bill in a legislative process likely to last at least a year.

By Ben Garside – ben@carbon-pulse.com

Comment