Review of the EU ETS: 'Fit for 55' package

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Government & Organizations, Non-profit

4.8 • 13 Ratings

🗓️ 4 March 2022

⏱️ 9 minutes

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Summary

As part of the 'Fit for 55' package, the Commission presented a legislative proposal to review the EU Emissions Trading System (ETS). The aim of the review is to align the EU ETS Directive with the EU target set out in the European Climate Law to reduce net greenhouse gas (GHG) emissions by 55 % by 2030, compared to 1990 levels. To this end, the amount of emission allowances would be reduced, fewer allowances would be allocated for free, and the ETS would be extended to maritime transport. This would reduce emissions in the ETS sectors by 61 % by 2030, compared to 2005. A separate new emissions trading system would be established for fuel distribution for road transport and buildings.

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Transcript

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0:00.0	Welcome to the European Parliamentary Research Service Podcasts.
0:05.0	In this podcast, we'll talk about the review of the EU emissions trading system to align it with the new, more ambitious, EU climate targets.
0:14.0	Want to know more? Stay with us.
0:17.0	The European Union's emissions trading system, or ETS, is the world's biggest scheme for trading
0:26.2	greenhouse gas emissions allowances.
0:29.0	Launched in 2005, this cap and trade policy has gone through several reforms and is now
0:35.8	in its fourth trading phase.
0:37.4	It remains a cornerstone of
0:39.4	the EU's policy to combat climate change and its key tool for reducing greenhouse gas emissions
0:45.7	in a cost-effective way. It operates in all EU member states, as well as Iceland, Liechtenstein and
0:52.7	Norway, regulating around 10,000 power plants and factories
0:56.2	and covering over 40% of the EU's greenhouse gas emissions.
1:01.2	That's right. And since 2012, it also covers the aviation sector.
1:08.3	But how does the system work exactly?
1:11.7	Well, the principle is simple.
1:14.3	The EU sets a cap on the amount of greenhouse gas emissions that can be emitted each year,
1:19.6	and companies need to hold allowance permits for every ton of CO2 they emit per year.
1:25.3	These permits or allowances are partly auctioned and partly given for free
1:29.3	to industries at risk of carbon leakage, and they can be traded. To incentivise companies to become more
1:36.4	energy efficient, the total cap decreases every year. And member states must use at least half of the
1:43.1	revenues from auctioning allowances to fight climate change.
1:46.9	To support energy-intensive industrial sectors and the electricity sector in their innovation and investment challenges,
	...

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