EWEA calls for "root and branch" ETS reform

14 July 2015


The European Wind Energy Association (EWEA) has called on the European Commission to implement deep reforms to the region's emissions trading systems (ETS) in order to align it with Europe's climate ambitions.

The Brussels-based organization says that the ETS must focus on modernising Europe's energy systems to foster more integration of renewable energy and provide a robust carbon price to incentivise investors.

"The ETS needs root and branch reform," said Kristian Ruby, Chief Policy Office at EWEA. "The instrument must be realigned with Europe's political ambition on climate change. The removal of surplus permits and the elimination of free allocation would be the first steps to achieving this."

The European Commission has already implemented a temporary 'fix' to address the surplus of emission allowances in the ETS, and has also proposed a number of other structural reforms to the system. EWEA says that any reforms must include tools that will drive fossil fuel-dependent states towards decarbonization.

It believes that proposals such as the modernization fund, which will set aside a share of ETS allowances for investment projects between 2021 and 2030, are key to addressing renewable energy integration in lower income EU countries.

"Putting measures in place to phase out the most polluting assets in Europe should be a top priority in this reform, particularly for those Member States in Central and Eastern Europe that rely heavily on coal-fired generation," said Ruby. "With a functioning ETS and a robust carbon price, we can speed up Europe's energy transition and reach our goals in a more cost-effective manner."

As a short term measure to address the surplus of emission allowances in the ETS, the European Commission is postponing the auctioning of 900 million allowances until 2019-2020 to allow demand to pick up.

As a more permanent solution, it has proposed the creation of a market stability reserve that would allow it to adjust the supply of allowances to be auctioned. This would also be helped by an increase in the annual linear reduction factor that determines the 'cap' in the trading system.

 



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