Trilogue on ETS with concrete results but only small movement on big issues / European Union agrees that CCU and direct air capture are an important part of climate policy / Companies that decarbonise should still get free allowances and be rewarded for the investment by that / Not enough spirit of compromise from the Council and not enough engagement from Timmermans

“In a third trilogue, negotiators of the European Parliament, European Council and European Commission agreed on some important elements on the revision of the European emissions trading scheme”, said the rapporteur of the Parliament, Peter Liese.

“Among other things, we agreed on a much stricter wording on international climate finance. Some member states are already using the revenues from the ETS to contribute to their obligation at international level but others are falling very short compared to their obligations, for example, from Glasgow last year. We have now fixed legally that member states need to report on the obligations that they have in this respect such as their strong commitment to continue scaling up their international climate finance towards the developed countries´ goal of mobilising at least USD 100 billion per year as soon as possible and that they substantially increase their efforts in this respect. I think it is an important signal to the international community that gathers in Sharm El Sheikh. Climate finance is the big issue here and it is very important that the revenues from the ETS don’t just disappear in the normal budget but are spent on purpose. Climate finance is one if the elements. Our ETS and in particular CBAM will be more acceptable for third countries if we clearly commit that the money is also spent on the international agenda.”

“On top of that, we agreed on a strong mechanism against price hikes. The Article 29a was sharpened. The threshold for when it is activated goes down from 3 to 2.4 and 75 million allowances will be released in the ETS market automatically if the threshold is reached. Consumers and industry are much better protected in this way and can prepare much better for the transition,” stated Peter Liese.

“Very important is in my view that we agreed on including CCU and negative emissions through air capture which means technologies to use the CO2 in the atmosphere in the EU climate policy. They may even be included in the ETS but as this issue is very complex, the Commission needs to assess all the options before. A very big achievement is in my view that innovative companies that decarbonize, can still benefit from the ETS. They can stay in the scheme and continue to get free allowances even if they decarbonize and under current legislation should normally leave the ETS. This will enable companies to invest faster, because they can go to their shareholders or to their bank and say: I will need a huge amount of money but it will pay off because I will continue to get free allowances. Of course, this has to be accompanied by other measures. On the big issues like ambition, ETS2, free allowances and the timetable of CBAM as well as the Modernisation Fund and the Innovation Fund/Climate Investment Fund we could not make progress, unfortunately. While the Parliament send a comprehensive document with many compromises to the Council on Wednesday and we are willing to move on even more issues, I have the feeling that the Council still thinks their mandate is the only possible compromise. This has to change. Otherwise, the member states have the responsibility for the failing these negotiations. Unfortunately, also the European commission did not come with very concrete compromise proposals against my expectations. My impression is that Executive Vice-President Timmermans has just too much on its table. He should really focus on bringing the Fit-For-55 across the finish line and not flood Europe with more environmental legislation on other issues every day. More and more people in the European Parliament are convinced now that we need a European John Kerry who focus only on climate diplomacy. Timmermans wants to do everything but it is not living up to his responsibilities in his core responsibilities,” concluded Liese.