Spain, Portugal, Denmark, Finland, Luxembourg, the Netherlands, and Sweden have urged the European Commission this Wednesday not to lower the ambition of the European Emissions Trading System (ETS) in the review it will present on July 17, warning that any relaxation of the system could compromise the EU's climate objectives and further burden the national efforts of the Member States.
According to diplomatic sources, these seven governments demand that the ETS continue to be "the cornerstone" of Community climate policy and argue that the post-2030 reform should serve to underpin the system, providing long-term "predictability" and regulatory certainty. "A reduction in ambition within the ETS carries the risk of exerting undue pressure on the potential national efforts of the Member States," the same sources point out.
In this regard, the signatory countries demand that any change in the annual reduction rate of the emissions cap maintain consistency with the EU's objective of reducing net emissions by 90% by 2040, and reject the use of international credits to meet ETS obligations, except as a limited safety mechanism.
Furthermore, they maintain that initiatives aimed at ensuring a level playing field should focus, whenever viable, on facilities that are already undertaking decarbonization investments, and they are in favor of the future European Industrial Decarbonization Bank playing an "important role" in financing the transformation of the industrial sector.
The Commission proposes greater flexibility for industry
In parallel, EU sources have indicated that the ETS revision proposal aims to strengthen its role as a driver of investment and competitiveness, while introducing an additional margin of flexibility for industry.
In particular, Brussels is considering proposing an increase in free emission allowances for industrial companies, subject to them undertaking decarbonization investments within Europe, with the aim of accelerating the transformation of the productive fabric and preventing investment leakage to other regions.
Likewise, these sources explain that the Community Executive wants a larger proportion of the revenue that Member States obtain through the auctioning of emission allowances to be specifically allocated to supporting industries subject to the ETS, understanding that, at present, these funds are not sufficiently directed towards industrial decarbonization.
In any case, Brussels emphasizes that the reform does not aim to reduce climate ambition, but rather to achieve the set goals "in the most efficient way" and to consolidate the ETS as a "driver of investment and innovation." At the same time, it stresses that it constitutes a "red line" that international credits cannot be directly integrated into the system to meet emission obligations.