On Friday, the Commission proposed a reform of the Emissions Trading System (ETS) to align it with the 2040 target, boost competitiveness and keep Europe on track for climate neutrality.
The Commission’s proposal would amend Directive (EU) 2023/959 on the EU emissions trading system (EU ETS). Key elements include alignment with the agreed 2040 target, the integration of carbon removals, possible scope extensions, addressing carbon leakage risks in sectors not covered by the Carbon Border Adjustment Mechanism (CBAM), the Market Stability Reserve (MSR), the use of ETS revenues, and potential international ETS linkages.
Pierfrancesco Maran (S&D, IT), Chair of the Committee on the Environment, Climate and Food Safety (ENVI), commented on the proposal:
"Since 2005, the ETS has proven to be a powerful tool to reduce greenhouse gas emissions and finance industrial decarbonisation in Europe. The insights we gathered during the ENVI hearing in June underlined that the ETS must continue to be a key pillar of the EU’s climate policy.”
"Moreover, with more than €250 billion generated since 2013 - and nearly €40 billion in 2024 alone - ETS revenues are a key financial lever for our industrial policy. We have a duty to ensure every euro is used transparently and strategically to both promote decarbonisation and boost European industrial competitiveness, and we need a clear commitment from member States to that end."
"The ENVI Committee stands ready to work on the ETS review and to play its part in a constructive spirit and with a sense of responsibility. Citizens, investors, and our industries need certainty - and Parliament will work to deliver it."
Background
The ETS (ETS1) aims to reduce greenhouse gas emissions from industrial and energy installations, aircraft operators and maritime transport by setting a price on carbon through a cap-and-trade system, while a separate ETS for road transport, buildings and other sectors (ETS2), postponed by one year to allow for a smoother implementation, will start operating in 2028. The ETS succeeded in reducing the greenhouse gas emissions of the covered sectors by half in 2024 compared with 2005.