European Parliament’s EU-ETS vote: ETS reform should be more ambitious
FORATOM, the voice of the European nuclear energy industry, gives a partial welcome to the outcome of the European Parliament’s 15 February vote on the EC Proposal to revise the EU Emissions Trading System (ETS) for its next phase (2021-2030).
If the ETS reform prevails with the Council, the EP’s position should help to boost carbon prices but falls short of fully aligning the ETS with the Paris Agreement*. The ETS should be spearheading the switch from fossil fuels to low-carbon sources for electricity generation (renewables and nuclear). If investments in low-carbon electricity production are to be incentivised, the price of carbon needs to be significantly higher than it is currently.
FORATOM had supported the ENVI Committee’s report which was being voted in the European Parliament this week. The ENVI report had proposed an annual reduction in the cap on emissions of 2.4%. FORATOM is disappointed that this was watered down to 2.2% in the plenary vote (in line with the EC Proposal) but nevertheless welcomes the improvement versus the current rate of 1.74%.
Although the EP rejected a more ambitious proposal for ETS reform, FORATOM welcomes the fact that the Parliament’s proposal doubles the Market Stability Reserve’s (MSR) capacity to withdraw the excess of credits on the market (24% per year from 2019) and agrees to cancel 800 million allowances from the MSR as of 1 January 2021. It will now be crucial for the Council to agree on an ambitious position that supports the measures adopted by the European Parliament.
FORATOM agrees that the cap-and-trade system is a key tool to meet the EU’s 2030 goal of a 43% cut in greenhouse gases from industries and power plants compared to 2005, which is why the EU needs a strong and robust ETS.
* Under the Paris Agreement, which entered into force on 4 November 2016, 113 Parties, including the EU-28, have committed to limit the global temperature rise to below 2°C above preindustrial levels and to aim at 1.5°C.