Delivering Investment to Implement Europe’s 2030 Climate & Energy Targets
Key topics: EU ETS
IIGCC’s new paper, Delivering Investment to Implement Europe’s 2030 Climate & Energy Targets, provides recommendations on the structural reform of the ETS. The reform is currently being prepared by the European Commission and focusses on carbon leakage provisions and setting up the new funds for countries to facilitate their transition to the low-carbon economy.
In order to ensure an orderly transition to a low-carbon economy, continuous incentives for innovation are necessary not only in the power sector, but also for European industry. The paper voices the investor perspective on a number of key issues:
· There is a large number of allowances that have not been assigned to their intended recipients, for example because industrial installations closed. These allowances should not flood the market and thereby increase the surplus in the ETS further, but should instead be placed in the MSR or permanently cancelled.
· While the paper in principle supports carbon leakage provisions, they should be limited to those companies actually at risk.
· The paper makes further recommendations on how to determine who is at risk of carbon leakage and that the modernisation fund should be focussed on sustainable projects.
· Finally, the paper supports the introduction of an emissions performance standard in the event that the reform of the ETS is not projected to lead to sufficient investment early enough to attain the 2030 targets.