A European Green Deal | Revision of the EU Emission Trading System (ETS)

LEGISLATIVE TRAIN 08.2021 1 A EUROPEAN GREEN DEAL

REVISION OF THE EU EMISSION TRADING SYSTEM (ETS) [ DEPARTURES ] > FIT FOR 55 PACKAGE UNDER THE EUROPEAN GREEN DEAL

CONTENT

On 14 July, as part of the 'Fit for 55' package, the Commission adopted a legislative proposal for a revision of the EU Emissions Trading System (ETS), to align it with the target of a 55 % reduction of EU net greenhouse gas (GHG) emissions by 2030, compared to 1990 levels. This target is part of the European Climate Law (see separate file), and was established on the basis of the Commission's climate target plan which was presented on 17 September 2020 (see separate file).

The EU ETS was launched in 2005 and covers about 45 % of EU greenhouse gas emissions. The latest revision of the EU ETS Directive, adopted in 2018, sets the total quantity of emission allowances for phase 4 (2021-2030), in line with the previous EU emission reduction target (40 % reduction below 1990 levels by 2030).

The legislative proposal proposal would include emissions from maritime transport in the existing EU ETS. Emissions from the current EU ETS sectors (including the extension to the maritime sector) should be reduced by 61 % by 2030, compared to 2005 levels, an 18 percentage point increase from the current reduction level of 43 %.

The proposal would establish a new, separate emissions trading system for emissions from fuels used in road transport and buildings. This new upstream system would become operational as of 2025 and apply to fuel suppliers rather than households and car drivers. Indirect social impacts from rising prices of road transport and heating fuels are addressed through a legislative proposal for a Social Climate Fund (see separate file).

The Commission presented separate legislative proposals for strengthening the ETS Market Stability Reserve and including aviation in the ETS (see separate files).

A public consultation on the inception impact assessment (roadmap) for the revision of the EU ETS was held from 13 November 2020 to 5 February 2021.

In the European Parliament, the proposal has been referred to the Committee on Environment, Public Health and Food Safety.

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Environment ministers held a first exchange on the ‘Fit for 55’ package at an informal meeting on 20 July 2021.

References:

• EP Legislative Observatory, EU Emissions Trading System (ETS), including maritime and operation of a market stability reserve. 'Fit for 55 package', 2021/0211(COD) • European Commission, Proposal for a directive amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and Regulation (EU) 2015/757, COM/2021/551 • European Commission, Communication on 'Fit for 55': delivering the EU's 2030 climate target on the way to climate neutrality, COM/2021/550 final • European Commission, Communication on the European Green Deal, COM/2019/640 • European Commission, State of the Union 2020: Letter of Intent to President David Maria Sassoli and to Chancellor Angela Merkel, 16 September 2020 • European Commission, State of the Union: Commission raises climate ambition and proposes 55% cut in emissions by 2030, Press Release, 17 September 2020 • European Commission, Commission Work Programme 2021: A Union of vitality in a world of fragility, COM/2020/690 final • European Commission, Stepping up Europe’s 2030 climate ambition - Investing in a climate-neutral future for the benefit of our people, COM(2020)562 • Directive (EU) 2018/410 of 14 March 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814