The HSE Group welcomes the provisional agreement reached in the early hours of Thursday, 9 November, on a reform of the European Union Emission Trading System (EU ETS). We believe that the agreement, if confirmed in this form by the European Parliament and the EU Council as co-legislators, will strengthen the role of EU ETS, which the HSE Group understands as the foundation of the climate change policy of the EU. A reform of the system for the period after 2020 could thus lead to a price of carbon that would adequately contribute to achieving the energy and climate change objectives of the EU.
The HSE Group has always supported an ambitious reform of EU ETS, and we are thus happy that the negotiators have managed to reach an agreement on the doubling of the rate at which allowances will be placed in the market stability reserve and an agreement on the possibility to annul surplus allowances, which would enable effective price and investment signals and ensure long-term predictability of the system for investors. The proposed reforms represent an incentive for reducing CO2 emissions, improving energy efficiency, investing in low-carbon technologies and establishing a clear and credible price of carbon.
The HSE Group has also advocated an increase of the annual linear reduction factor for the total amount of allowances from 2021 onwards to 2.4%, which remains too large a challenge for the negotiators, as they could only agree to a factor of 2.2%. An ambitious reform of measures for achieving the climate and energy objectives of the Winter Package will thus be necessary in order to achieve the objectives of the Paris climate agreement.
A more adequate price of carbon would mean at the national level more funds for the financing of investments with the revenue made with the sale of allowances going to the Climate Fund – what is meant here in particular is the financing of the development of renewable energy sources and other technologies contributing to decarbonisation of the economy.