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Strong support for innovative industries, strong pressure on polluters / Reasonable compromise on ETS II


"This compromise will help to save our planet but at the same time protect European jobs and protect people from excessive prices.” This is the comment of the main negotiator (Rapporteur) on the EU ETS Peter Liese after a breakthrough in the negotiations with the other political groups. Liese explained that he managed to improve the Commission proposal when it comes to support for innovative industries. His colleagues accepted his so called bonus-malus-system which means that companies that are emitting much less than others in their sector,  will get additional allowances but those that are emitting much more and don’t do efforts to decarbonise, will have to pay a much higher bill in the next years. The Innovation Fund, which was already proposed for a significant increase by the European Commission, will get even bigger. Additional 50 million allowance will be auctioned for this purpose.

A compromise was also reached on the so-called ETS II for road transport and heating. Liese succeeded in his effort to introduce this scheme as soon as possible for commercial operators. He had to give in because of resistance from the other groups on the private sector. The private sector will only be included in 2029 and also only if specific conditions are met and the Parliament agrees again to a new proposal after 2026. "This part of the compromise is painful but it is the spirit of a compromise that you give and take. While I am disappointed that I could not get an earlier date I am happy with the other measures that we agreed upon: a price cap, a limitation of the cost pass through to big oil companies an earlier start of the Social Climate Fund. The Social Climate Fund however will be significantly smaller because the scope is smaller."

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Fit for 55 including increased use of renewables and more energy efficiency also crucial to be less dependent from Russian energy / Carbon pricing and negative emissions must be key elements of Fit for 55

 

"The IPCC report makes clear that it is very important to act as soon as possible. The implementation of an ambitious climate policy package for 2030 is more urgent than ever. Most of the elements like increasing renewable energy and energy efficiency are also beneficial to be less dependent from Russian fossil fuels. While in the very short term, we may have to use more coal and more nuclear, the answer for the future is the Fit for 55 package,” said Peter Liese, environmental spokesman of the largest group in the European Parliament (EPP, Christian Democrats). Liese insisted that any solution must be found internationally: “The European Union is the only big economy that has reduced its emissions in the last 30 years and it is right that we have to increase the pace of the reductions drastically. Europe has to lead, but we also have to increase our efforts to convince third countries. Even the encouraging proposals of Joe Biden are much less ambitious than the EU’s targets for 2030.”

 

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Vote on ETS in less than three weeks / Quite some outstanding issues / Controversial vote on specific points possible

The vote on the biggest ever climate legislation of the European Union is expected to take place in less than three weeks. On 16th (and 17th) May, ENVI will vote on the ETS reform which not only covers the sectors that are already covered but also as a new sector the maritime sector and a new, separate system for road transport and buildings is planned. Positions in some issues are still very far apart even though negotiators of the political groups went now through all parts of the text. Two major outstanding problems are the level of ambition in ETS I and the question if and how the ETS II for buildings and road transport will be introduced. “A majority of the groups in ENVI demands more ambition in ETS I in mainly all the parts of the proposal: not only the overall ambition of 61% of emission reduction in 2030 but also the level of free allowance and the ambition of the so-called MSR. I personally am not convinced that this is the right thing to do and that it reflects a majority in plenary given some of the votes in the opinion-giving Committees,” said Peter Liese, Rapporteur on the file, in a meeting with journalists on Tuesday.

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No radical reforms necessary but more market transparency beneficial / Limit price increase and enable use of coal instead of gas urgent in these difficult times


Today the EU Agency for European Securities and Markets Authority (ESMA) has published its in-depth analysis of the EU carbon market. “The report shows that radical reforms of market mechanisms in the ETS are not necessary,” said Peter Liese, Rapporteur of the reform of the EU ETS. “It is important to let the market work and also to enable companies, especially SMEs, to get help from financial actors to manage their obligations. In any case, however, it is important to even increase transparency to avoid manipulation and to limit speculation”, said Liese. ESMA has found no current major deficiencies in the functioning of the ETS market, it says in its final report published on Monday. However, it said that the share of investment funds and high frequency and algorithmic trading mainly from companies from the U.K. and the U.S. have significantly increased. Moreover, it added that investment funds and other non-financial sector firms have also trade options to a larger extent and ESMA has faced significant challenges trying to identify the origin of the market participants. “All these findings require no radical reform but concrete action and I ask the Commission to act and propose this action immediately,” concludes Liese who had already included a respective amendment (Commission to act after ESAM report) his amendment to his own report in February.

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