The European Commission has presented a legislative proposal to revise the EU Emissions Trading System (ETS) in line with the 2030 climate and energy policy framework agreed by the EU leaders in October 2014.
The key component of the reform are:
- The reform will start on 1 January 2019
- The surplus allowances temporarily taken out (or ‘backloaded’) from the market last year, would be placed into a Market Stability Reserve (MSR) rather than returned to the (already flooded) market.
- The overall quantity of allowances will decline by 2.2%/year starting from 2021.
- Over the current trading period (2013 to 2020), 57% of the total amount of allowances will be auctioned, while the remaining allowances are available for free allocation. The share of allowances to be auctioned will remain the same after 2020.
The proposal must be agreed by a majority of member states and the bloc’s parliament in a process that could take at least two years. It includes also proposals for energy labelling for appliances, a consultation on the electricity market design aimed at helping deploy renewables and a communication aimed at getting households to use energy more efficiently.
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