EU To Tighten Carbon Market, Shows A Draft Plan: Reports

Tougher measures to control its carbon market in order to cut down on emissions faster and to put a price tag on pollution kin new sectors is being planned by the European Union, claimed reports quoting information from people with knowledge of the matter.

The central climate change addressing policy of the 26 nation bloc is the EU’s emissions trading system (ETS) which mandate companies in the power generation sector, manufacturing industries and airlines running European flights to purchase permits for emitting CO2.

As a part of a combination of policies designed to meet a more ambitious climate change target, a revamp of the existing system wil be proposed by the European Commission next month, said the reports.

The supply of CO2 permits in the ETS will face a one-off cut, said reports quoting form a draft of the ETS proposal.

Reports said that the Commission wants that the rate of decrease in the number of permits entering the ETS every year from companies should also be faster even though the desired rate was not specified in the reports.

No comment on the reports was available from the Commission.

The ETS “market stability reserve” would be strengthened by the proposal which is a system that was designed to prevent a build-up of excess permits that could ultimately lead to depressing EU carbon prices.

Reports said that the reserve would absorb 24 per cent per year until 2030 in the event of the ETS containing more than 1.096 billion spare permits. The reserve would be able to absorb enough permits to bring that down to 833 million in the case of the number of permits ranging from 833 million and 1.096 billion in circulation.

The final reforms need to be negotiated by the EU member states and the European Parliament which could take as long a couple of years.

For industries covered by the EU’s planned carbon border levy, the Commission proposes to end the system of free carbon permits. This move could increase the carbon costs for producers of steel, cement, aluminium and fertilisers.

The Commission also plans to expand the ETS and include the shipping industry as well as create a new, separate ETS for transport and heating systems in buildings, said reports.

The Commission has said it will create a fund to support vulnerable households if the carbon pricing system raises fuel bills.

(Adapted from

Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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