European Parliament votes on EU ETS Phase 3 proposals
The Environment Committee of the European Parliament voted on 7 October to support the Commission’s proposals for Phase 3 of the EU Emissions Trading Scheme (EU ETS) issued on 23 January 2008, including the Commission’s proposed target of reducing greenhouse gas emissions in the EU by 20% in 2020 compared to 1990 levels. This is a potentially significant positive development for the renewables sector across the EU and will also be of particular interest to companies subject to EU ETS (both currently and those that are likely to fall under the scope of the Scheme as from Phase 3, starting in 2013).
Key measures
The Environment Committee supported the following proposals for Phase 3 of the EU ETS:
- the introduction of a single EU-wide emissions cap instead of the existing 27 national caps
- making full auctioning of allowances the rule as from 2013 (including for the power sector), with the exception that 85% of all emission allowances for the manufacturing sector should be awarded free of charge in 2013, with that number subsequently decreasing each year so that full auctioning of allowances is achieved in 2020
- the channelling of ETS auctioning revenues, which could amount to €50 billion annually by 2020, to support climate change protection measures
- the widening of the scope of the EU ETS to include new greenhouse gases (nitrous oxide and perfluorocarbons) and new industry sectors (such as aluminium producers as well as the shipping industry)
- supporting carbon capture and storage (CCS) projects through the EU ETS by, in particular, awarding up to 500 million allowances to such projects in the EU and third countries. Although the value of this support mechanism will depend on the price of CO2 at the time the gas is stored underground, it is estimated that it could exceed €10 billion.
Further proposals for CCS
In a separate vote on a draft directive from the Commission regarding the establishment of a legal framework for CCS in the EU, the Environment Committee asked the Commission that contracts for the construction of up to 12 large-scale CCS demonstration projects be issued prior to the United Nations meeting in Copenhagen in December 2009, where a successor treaty to the Kyoto Protocol is expected to be signed. In addition, the Environment Committee also proposed to introduce a new requirement for all large power stations built from 2015 to be equipped with CCS technology.
The Environment Committee’s decisions will now pass through the EU co-decision procedure before it can be adopted, a process that involves the European Council.
To access the Environment Committee’s press release, please click here.
To read our previous law-now on the Commission’s emission reduction proposals for 2020, please click here.
