BRUSSELS, 26 January – European policymakers should capitalise on momentum from the Paris climate talks and ensure the revision of the EU ETS keeps the system at the core of the region’s climate change response, says IETA.

In a position paper released today, the business group and its members welcome the proposal to revise the EU ETS for the post-2020 period, to ensure it plays a central role in the EU’s climate policy. This revision process is an opportunity to address key principles for the smooth functioning of the market, such as allowance scarcity and improved coordination of emissions reduction policies, says IETA.

In light of last month’s historic international climate change agreement in Paris, the paper also calls for clarity on the process if the EU is to increase its emissions reduction target every five years and the impact on the emissions trading programme. 

“The EU ETS revision is a welcome step to enshrining in law the political agreement on the EU’s 2030 climate policy and bolstering confidence in the market’s future,” says Dirk Forrister, IETA’s CEO and President. “The Paris Agreement has given a fresh burst of energy to carbon markets globally – and with more systems under development, it is important that existing programmes set an example and work as efficiently as possible.”

The paper also sets out IETA’s position on how best to address competitiveness concerns, in light of a tighter cap of allowances post-2020. Any provisions to address the risk of carbon leakage should be fair, proportionate and harmonised across the EU to avoid causing market distortions, says the paper.

“The EU ETS revision offers a timely moment to address the appropriate level of support needed for sectors genuinely facing a loss of competitive edge due to climate policies, particularly in situations where leakage could increase overall GHG emissions globally,” says Sarah Deblock, IETA’s Director of European Policy. “However, if we are to meet the 2°C target, it is also important that any support does not hinder cost effective emissions reductions and should be phased out as the threat to competitiveness subsides.”

The full paper is available on the IETA website.