Expect evolution, not revolution for post-2020 ETS reform -EU Official

Published 08:54 on March 4, 2015  /  Last updated at 14:50 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

Operators in the EU ETS should not expect big changes to the scheme after 2020, and policymakers redrafting laws governing the fourth trading phase of the world’s biggest carbon market are likely to make only minor tweaks, a senior EU official said Wednesday.

(updates with details)

Operators in the EU ETS should not expect big changes to the scheme after 2020, and policymakers redrafting laws governing the fourth trading phase of the world’s biggest carbon market are likely to make only minor tweaks, a senior EU official said Wednesday.

“It will be more evolution than revolution and very much a continuation of what we have in this phase,” said Peter Zapfel, speaking at the Argus European Emissions Markets Conference in Amsterdam.

“The focus will be on implementing the strategic guidance given by EU leaders last October.”

He said that first change to the ETS Directive would be the “simple” step of deepening the annual ETS cap reduction from 1.74% to 2.2% from 2021. A “more complex” change would be extending the carbon leakage measures that govern free allocation of EUAs to industries beyond their currently scheduled expiry in 2020.

He said the EU executive will start work on a legislative proposal to amend the ETS Directive for the post-2020 period shortly after lawmakers agree changes to the MSR.

Zapfel said he was confident that Latvia, current holder of the EU presidency, would fulfil its aim of completing an agreement on the MSR by the end of its term in June. Last week EU climate commissioner Miguel Arias Canete said he expected work on the 2030 proposal to start in June.

The EU Parliament’s call to sell 300 million unallocated EUAs held in the MSR for an innovation fund could be one factor to encourage reluctant member states to agree the measure, Zapfel told delegates.

Several member states including Germany and the UK have backed an early start to the MSR, as soon as 2017, but Poland and seven other member states oppose this, enough to form a blocking minority.

“The Council has not yet got a position on the MSR, there are meetings in the coming weeks and that that situation is expected to change before the end of the month,” said Sarah Deblock, EU policy director for lobby group IETA.

Both the EU Parliament and member states in the EU Council need to agree on the MSR for it to become law.

By Ben Garside – ben@carbon-pulse.com