EU Lawmaker Proposes Higher Carbon Market Spending on Industrial Decarbonisation
EU Carbon Market Reform and Industrial Decarbonisation Proposals
By Kate Abnett
Background: EU Carbon Market and Climate Change Policy
BRUSSELS, Sept 11 (Reuters) - European Union countries would have to invest a bigger share of their carbon market revenues in decarbonising local industry under proposals by the European Parliament's lead negotiator.
The EU is negotiating a revision of the bloc's main tool for addressing climate change which obliges industries and power plants in Europe to buy permits to cover their CO2 emissions, and trades their spare ones in a carbon market.
Key Proposal Details
Increased Revenue Allocation for Decarbonisation
Under a draft proposal by lawmaker Peter Liese, the EU would require governments to spend 75% of the revenue they collect from ETS permit sales on decarbonising local industries covered by the emissions trading system. That would go further than the 50% initially proposed by the European Commission.
Support for Industry and Energy Production
Liese said his proposal aimed to provide some immediate relief to industries, some of which have complained about high CO2 costs hurting their competitiveness, and better support investments in domestic industry and energy production.
"It is possible to adapt a current scheme and give industry more breathing space without endangering the climate targets," Liese said in a statement.
Changes to Emissions Cap Reduction Rates
The draft proposal, which lawmakers will negotiate in the coming months, would also reduce the emissions cap in the ETS by 3.4% per year from 2031, then 2.3% from 2036.
Comparison with European Commission Proposal
The Commission had proposed cutting the annual rate to 3.7% from 2031, and 1.7% from 2036. By comparison, Liese's proposal would initially let industries lower emissions at a slower pace and catch up by cutting faster in the second half of the 2030s.
Industry Response and Political Context
That responds to pressure from chemicals producers and other industries which have warned that the cost of complying is hurting their ability to keep European factories afloat and compete in global markets.
Liese is a German lawmaker from the European People's Party, the biggest lawmaker group in the European Parliament, which will be key to deciding the course of the ETS revision.
Next Steps in ETS Reform Negotiations
The European Parliament and EU member countries are each devising their negotiating positions on the ETS reform. Once they do that, which is expected in December, they will together negotiate the final changes.
(Reporting by Kate Abnett; Editing by Alexander Smith)
