The European Parliament has approved plans to freeze the auctioning of a portion of the current glut of CO2 permits to boost their price and encourage firms to invest in low-carbon innovation. The measures, amended by the Parliament in July 2013 to set stricter conditions for the freeze, are intended to restore the incentive effect of the Emissions Trading System, which is designed to curb CO2 emissions. Under Parliament's amendment, already agreed with member states, the European Commission may, in exceptional circumstances, adapt the timing of auctions, provided an impact assessment shows that the sectors concerned will not face a significant risk of companies relocating outside the EU. The Commission will only be able to make one such adjustment, up until 2020, covering a maximum of 900 million allowances.
Since its creation in 2005, the Emissions Trading System (ETS) has set an overall emissions ceiling which is gradually being reduced over the long term. By 2020, emissions from industrial sectors covered by the ETS will be 21% lower than in 2005.
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