This decision, as reported by Bloomberg, aims to protect the competitiveness of the industry in the face of global challenges and increasing pressure from Member States.
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Ahead of the upcoming EU leaders' summit next week, which will focus on strengthening the bloc's economy, Intensive talks on the reform of the ECJ are ongoing.
The system, which is a key tool for reducing greenhouse gas emissions, can be adjusted to slow the rate of emissions reductions and lower costs for industry.
Read also: Changes are coming to the ETS. Free allowances will be issued conditionally
As EU decision-makers cited by Bloomberg point out, the reforms are intended to be a response to concerns about the region's competitiveness and rising energy costs.
The ETS system and new challenges for the green transformation
In the face of changing priorities, such as increased defense spending following the Russian invasion of Ukraine and growing competition from China, the EU's ambitious climate goals have fallen by the wayside. The consensus on environmental action that seemed unshakable five years ago is giving way to protectionism and economic policies aimed at reducing costs..
Last December, EU negotiators agreed on a new emission reduction target of 90%. by 2040 compared to 1990 levels. At the same time, it was proposed that 10 thousand installations covered by the ETS had more time to decarbonize.
Read also: ETS cuts emissions, but the climate continues to warm. The record year 2024 is behind us.
This means that the reduction in emission limits to zero, originally planned for 2039, may be delayed.
Changes to the ETS system are necessary
Peter Liese, a German MEP from the European People's Party, emphasizes that although the ETS system should not be suspended, it requires adjustments.
“We can reduce the pressure on companies without giving up our climate goals,” said Liese, quoted by Bloomberg.
Read also: Poland will be particularly affected by ETS2. People with low incomes are most at risk
The European Commission, which is expected to present details of the reform in the third quarter of this year, declined to comment on potential changes. However, it is known that the proposals may include, among others: managing the supply of emission allowances in such a way as to avoid sudden price increases.
Rising prices in the ETS emissions system in the crosshairs
During December negotiations on the 2040 climate target, the EU agreed to postpone the launch of a new carbon dioxide emissions market for road transport and heating fuels. At the same time, attention was drawn to the problem of rising prices in the existing ETS system.
Analysts predict that by 2040, carbon dioxide emissions contract prices could rise to EUR 400 per tonne, up from around EUR 82 currently.
Jos Delbeke, former official of the European Commission and co-founder of the ECJ, points out that the carbon market should be part of a well-thought-out industrial policy.
“Market liquidity will decrease as limits fall, increasing the risk of price spikes,” noted Delbeke, now a professor at the European Union Institute in Florence.
Read also: The EU problem of ETS emission allowances. Poland receives less of them than it needs
Delbeke suggests introducing stabilizing mechanisms, such as a hidden pricing corridor that would keep carbon prices moderate. In the short term, the EU could also use the 370 million free allowances collected in a special buffer to support companies investing in low-emission technologies.
