BusinessEurope comments on the European Commission EU ETS reform proposal
Key messages
In order to place the EU Emissions Trading System (EU ETS) revision in context, this position paper recalls some key data, highlights what is at stake and clarifies a few concepts before elaborating on a number of concrete recommendations to amend the European Commission proposal, in particular:
- Changing the distribution between auctioning and free allowances in order to secure sufficient free allowances for the future growth of new and most efficient installations, and to avoid the application of the cross-sectoral correction factor;
- Adjusting better allocation to real industry activity levels to support economic growth and to prevent under or over allocation;
- Ensuring realistic benchmarks based on bottom-up real installation data taking into account sector-specific characteristics, once at the beginning of the fourth trading period and without a flat rate. Their level of ambition should be in line with technological progress to ensure industry's competitive edge;
- Getting the carbon leakage list right allowing for flexibility on the qualitative threshold for carbon leakage assessment;
- Harmonising compensation for indirect costs to ensure an adequate protection of industries at risk of investment leakage;
- Making the innovation fund fit-for-purpose by improving the eligibility criteria and reducing the financial risk for companies wishing to invest in innovation projects and focusing on the ETS sectors;
- Simplifying the EU ETS for small emitters.