EU reviews carbon market

The European Council announced that a consensus was reached in negotiations between member states and European Parliament (EP) negotiators on the regulatory package, which includes the revision of the EU Emissions Trading System (ETS), prepared for achieve the climate targets in the European Green Deal.

In the statement, it was recalled that the EU Emissions Trading System is a carbon market for emission allowances and emission allowance trading in energy-intensive industries and the electricity generation sector, and the system aims to reduce carbon emissions.

Recalling that the ETS came into force in 2005, it was stated in the statement that emissions in EU countries have been cut by 41 percent so far with the system. “The agreement makes the system more ambitious to further reduce emissions,” the statement said.

EMISSIONS REDUCTION TARGET INCREASED TO 62 PERCENT

Noting that the overall EU emission reduction target in the sectors covered by the ETS was increased from 43 percent to 62 percent by 2030, the statement said that to achieve this target, emission allowances in the EU will be will decrease from 2024.

In the statement, it was noted that within the scope of the system, unpaid leave allocations for industries will also be gradually reduced from 2026 and completely eliminated in 2034.

Pointing out that emissions from maritime transport are also included in the scope of the ETS, it was stated that the obligation will be applied to this sector gradually. In the statement, it was indicated that a different emissions trading system will be established for the buildings and road transport sector, which will enter into force in 2027.

SOCIAL CLIMATE FUND TO BE ESTABLISHED

In the statement it was noted that a Social Climate Fund will be established to help poor households and small businesses against the financial effects of the new system, and that this fund will be part of the EU budget and revenue can be generated of up to 65 billion euros. be assigned.

The package in question includes several adjustments to the “Fit for 55” package, which is part of the European Green Deal and aims to reduce emissions by at least 55 percent by 2030.

EXCEEDING THE THRESHOLD VALUE WILL RECEIVE A CARBON CERTIFICATE

Within the scope of the EU Emissions Trading System, industrial facilities and energy producers in European countries need carbon certificates if they emit carbon above certain threshold values. The price of these certificates varies according to demand.

These carbon certificates generate significant costs for producers. For this reason, industrial facilities make various investments and take steps to reduce carbon emissions.

For the package to enter into force, it must be officially approved by the EU countries and the EP and published in the Official Journal of the EU. (AA)