Reforms to the EU’s Emission Trading Scheme (ETS) have been approved today by MEPs in Strasbourg. The ETS is the world’s first, and to date largest, installation-level cap-and trade system for cutting man-made greenhouse gas emissions.
It puts a monetary value on carbon emissions, in order to better reflect the costs of climate change and the opportunities for low-carbon options in our production and consumption choices. The ETS covers emissions from electricity, industry, and aviation – covering about 40% of total emissions. However, since the financial crisis, the ETS has been weakened through an excess of allowances which has lowered carbon prices and, in turn, disincentivised investment in lower emitting technologies.
The new agreement is critical to reinvigorating the carbon market, pushing up the carbon price, and driving the EU’s transition to a low-carbon economy. South West MEP Julie Girling led negotiations for the Parliament on an agreement setting out these reforms. She believes the changes strike the right balance between the EU’s long-term climate commitments, while ensuring that European industries are protected from being undercut by external competitors operating to lower emissions standards.
Speaking after the vote, Mrs Girling said: “The EU must have an emission’s trading system that can deliver the goals of the Paris Agreement if it is serious about its climate leadership. We have been careful to balance environmental concerns and protecting energy intensive industries throughout Europe. “There are now 31 countries within the EU ETS and the rest of the world are now moving forwards to create their own. We have to keep building on this momentum.”