COUNCIL AND PARLIAMENT REACH PROVISIONAL DEAL ON ETS
On 18 December, negotiators from the European Parliament and the Council reached a provisional agreement on the revision of the EU Emissions Trading Scheme (ETS) and on the Social Climate Fund. The deal includes maritime emissions in the ETS 1 and formally creates an ETS 2 for buildings and road transport.
The Council and Parliament confirmed their earlier agreement on the inclusion of maritime emission in the ETS. The scheme will be gradually phased in over 3 years starting in 2024 and will cover ships above 5000 GT. The ETS will account all emissions from intra-EU journeys, and 50% of emissions of journeys from/to EU ports from/to third countries. The negotiating teams also agreed to extend the scope of the ETS to other greenhouse gases than CO2, such as nitrous oxide and methane. 20 million ETS allowances will be earmarked for specific projects in the shipping sector in the Innovation Fund/Climate Investment Fund.
The negotiating teams agreed to create a new, separate emissions trading system (ETS 2) for the buildings and road transport sector which will be launched in 2027, one year later than the Commission proposal. The scope of the ETS 2 has been expanded to cover fuel used for other sectors such as manufacturing. In addition, ETS 2 could be postponed until 2028 if energy prices are exceptionally high. The co-legislators agreed on a temporary possibility for Member States to exempt suppliers from surrendering allowances until December 2030, if they are subject to a carbon tax at national level, equivalent or higher than the ETS 2. Finally, a price cap of 45€ per allowance has been set up, with additional allowances being released if the ETS 2 price exceeds that cap over a certain period of time.
Source: Council of the EU, European Parliament