EU ETS Draft Manages to Strike a Delicate Balance

The European Chemical Council CEFIC, the European Parliament and the European Commission have reached a provisional political deal on reforming the EU Emission Trading Scheme (EU ETS). The compromise deal addresses a number of critical elements which were widely debated since the beginning of the reform process in 2015.

Speaking in response to the draft, Marco Mensink, Director General of CEFIC, said: “We congratulate the negotiators for striking a deal that tried to find a balance between a stronger EU ETS and a fair treatment of EU industries.”

The draft includes increasing the volume of the Innovation Fund which will promote low carbon technologies. It also includes an increase of allowances for industry, which increases the likelihood that the best performing companies will receive the allocation they need. This is one of the core principles of the EU ETS and CEFIC position.

The provisional agreement has rejected a tiered approach to allocations which would have significantly impacted many sectors by causing a severe under-allocation as a result of preferential treatment for a select few.

“Our analysis is positive, considering the long negotiations and extreme positions taken before. We understand the need to improve the EU ETS.  Industry will be impacted in many places. However we also see the need to close the debate now”, said Marco Mensink.

In the course of the year ahead, a lot of implementation details are still to be decided. Amongst them, whether or not best performing companies in Europe will face additional direct and indirect carbon costs.