The new emissions trading system for road transport and buildings (ETS 2) is a key element in the policy mix to decarbonise the economy in a technology-neutral and competitiveness-friendly manner, as set out in the Competitiveness Compass.
While the current framework already includes strong safeguards to ensure a smooth launch of the system and to keep carbon-price developments in check, the Commission has assessed additional ways to strengthen the stability and predictability of the ETS 2 regulatory framework ahead of its start.
At the 21 October Environment Council, Commissioner for Climate, Net Zero and Clean Growth Wopke Hoekstra announced that the Commission will soon present a package of proposals to address concerns about future carbon-price levels and volatility, and to help accelerate investments ahead of the launch of the ETS2 market. The move responds to letters received from 19 Member States and numerous Members of the European Parliament.
Firstly, amendments to the Auctioning Regulation would enable ETS2 auctions to start earlier, providing a more predictable price signal and allowing Member States to access carbon revenues sooner.
Secondly, together with the Commission, the European Investment Bank is currently exploring a new ETS2 Frontloading Facility for Member States. The Facility will prefinance decarbonisation measures to accelerate the uptake of clean heating and mobility technologies, improve their affordability for low- and middle-income households, and support the implementation of the Social Climate Fund.
Finally, targeted adjustments to the Market Stability Reserve (MSR) Decision would strengthen the mechanism’s ability to intervene if the ETS2 price should exceed a certain level, enhance its long-term capacity, and enable earlier and smoother action to stabilise the supply of ETS2 allowances.
The proposed measures can be implemented without amending the ETS Directive. The Commission services will now prepare the aforementioned legal proposals with a view to their swift adoption by the Commission in the coming weeks.
