Member States agreed on ETS reform negotiating position

Member States agreed on ETS reform negotiating position

The Member States agreed their negotiation position on the EU ETS reform file during the Environmental Council on 28 February 2017. The agreement was supported by 19 countries out of the 28 composing the Council of the EU.

The emission trading scheme (ETS) is one of the main tools to reduce greenhouse gas emissions in the EU, which has committed to cut emissions by at least 40% by 2030. The Member States’ Ministers, which constitute the Environmental Council, consolidated their position on the reform just two weeks after the European Parliament had voted its own position.

One of the main issues meant to solve through the reform, it is the low price of the CO2 that is stagnating around €5 per ton; a price way too low to boost the necessary investment in emissions reduction technologies.

The agreement reached by the Ministers foresees doubling the rate at which the Market Stability Reserve (MSR) absorbs unallocated allowances starting in 2019 (24 instead of 12 percent). Member states also agreed to annually delete emissions in excess over a certain threshold held in the MSR starting in 2024.

To the disappointment of environmental NGOs the Ministers also decided to increase from 1 to 2 percentage points the amount of free allowances given to the industrial sector. Several countries strongly pushed for this proposal to avoid energy-intensive industries ‘carbon leakage’, meaning relocation of businesses in less environmental strict regions.

The revision of the ETS is now to be negotiated in trialogue meetings between the European Parliament, European Council and European Commission.