CO2 IQ’s Post

Future of Emissions Trading in the EU: Coverage Analysis 🏭📈 The ERCST - European Roundtable on Climate Change and Sustainable Transition has just published this comprehensive report on the future scope of the EU Emissions Trading System (#EUETS), by Andrei Marcu and Elena Bonfiglio. The study addresses areas where emissions trading in the EU might evolve, influencing climate policy and carbon markets, it examines sectoral and geographical expansions, non-CO2 emissions, and international credits. 🔑 Key Findings: -  Sectoral Expansion: The report explores the potential for expanding ETS coverage to sectors like municipal waste incineration, international aviation, and maritime transport, providing timelines and impact analyses. - Inclusion of Negative Emissions: It examines the role of carbon dioxide removal (#CDR) and its gradual integration into the ETS, which could become critical for achieving net-zero goals. -  Geographical Expansion: The report discusses the possibility of including Ukraine in the ETS framework and the effects this might have. The report also suggests an alignment with the UK and its ETS, while an interesting but more challenging integration would be with Turkey. -  A Single Market for CO2: The authors highlight the political desire to unify the two emissions trading systems (ETS1, ETS2) into a single EU-wide market. However, differing abatement costs and sector-specific challenges pose hurdles to that. 🌍 Ursula von der Leyen, President of the European Commission, has confirmed that “the aim is to accelerate the build-up of a Single Market for CO2.” While there is strong political will for this integration, it's far from guaranteed. The timing depends on several factors, including technological advancements, financial capabilities, sector Marginal Abatement Cost Curve (MACC), public and political support, and international developments. 🤔 What’s Next? Expanding emissions trading to new sectors will likely align with the broader climate policy calendar. The 2040 emissions target, to be presented in 2025, offers a key moment for introducing further changes. Additionally, legislation like the CBAM could provide potential solutions. A unified, comprehensive approach is essential—fragmented laws risk undermining the EU’s climate strategy and carbon market stability. #NetZero #CarbonPricing #GreenDeal #EnvironmentalPolicy #Deacarbonisation #GreenTransition #CBAM #FitFor55

Our Senior Policy Manager Mark Preston Aragonès spoke at a Stakeholder Roundtable on “Future of the EU ETS – Carbon removals ", organised by ERCST - European Roundtable on Climate Change and Sustainable Transition.    🌍 By 2026, the Commission will explore if carbon removal activities could be covered by emissions trading. The roundtable explored the potential interaction of carbon removal technologies within the EU ETS framework.    In his intervention, Mark referred to our report 'Who Should Use NETPs?'. He highlighted that we should explore alternative means of financing CDR rather than betting on the ETS. Furthermore, the allocation of CDR to counterbalance residual emissions is contingent on multiple conditions, and there are numerous questions and principles that need to be taken into consideration for this purpose.    In case you missed it, read more in our report 🔗 https://lnkd.in/dzgxW_eU    #ETS #CDR #EUETS #CarbonRemovals #EUCarbonRemovals #netzero #negativeemissions #ClimateAction 

The European Union (EU) set out ambitious climate goals like reducing greenhouse gas emissions by at least 55% by 2030 and to achieve climate neutrality by 2050. 🌱 Central to this effort are the EU Emissions Trading System (EU ETS) and the Carbon Border Adjustment Mechanism (CBAM). Both instruments are designed to reduce carbon emissions while maintaining the competitiveness of EU industries. The phase-out of free EU ETS certificates and the introduction of CBAM certificates represent a significant shift in the EU’s approach to carbon pricing, with implications for both EU and non-EU producers. Read more in our latest article: https://lnkd.in/dkQucY8V #CBAM #EUETS #Decarbonization #supplyonesg

In late February the EU institutions 🇪🇺 reached a preliminary agreement on the legal framework for voluntary carbon removal certification! The text can be found 👉 here: https://lnkd.in/eXZfprms   The BDE Bundesverband der Deutschen Entsorgungs-, Wasser- und Kreislaufwirtschaft e. V. welcomes the agreement as a practical solution for a technology-neutral approach to carbon removals which was highlighted by the expanded scope of emission capture methods. The new rules establish a crucial legal framework for voluntary #CO2 removals, aiming to foster the CO2 removal market and contribute to #EU climate neutrality by 2050 – which cannot only be achieved by reducing emissions.   However, most of the crucial aspects of the regulation will be determined in subsequent delegated acts, including key elements such as the certification method, by the European Commission. The BDE criticizes this approach because it bypasses the standard legislative process, that enables MEPs, among others, to propose amendments. Moreover, economic operators are frequently only superficially consulted during the delegated acts adoption procedures. This diminishes democratic legitimacy, undermines the quality of legislation, and erodes trust among citizens and businesses in EU institutions.   Read the BDE's full press release on 👉 our website (only available in German 🇩🇪): https://lnkd.in/e48C4dUf   #CarbonRemovals #EU #EuropeanCommission #ClimateTargets2050 #CircularEconomy

While the EU only accounts for about 8% of global CO2 emissions, it holds a historical responsibility as one of the earliest industrialized regions. The EU is thus seeking solutions to address the urgent challenge of climate change. The European Parliament voted in a Carbon Removal Certification Framework to pave the way for the development of carbon removal solutions. But what are the opportunities and limitations? And who is concerned by this initiative? Find out more: https://lnkd.in/eJFeMVYb

🌍 EU ETS: The Cornerstone of European Climate Policy 🌍 The recently published "EU ETS 101" guide offers a comprehensive overview of the European Union's Emissions Trading System (EU ETS), one of the primary tools driving decarbonization in the EU. Here's a breakdown of key insights from this guide and why they matter: 🔑 What is the EU ETS? The EU ETS is a cap-and-trade system aimed at reducing greenhouse gas emissions by pricing carbon across the power, industry, and aviation sectors. It's a market-driven mechanism that incentivizes businesses to cut emissions by making pollution expensive. Covering over 10,000 installations, it's the largest system of its kind globally. 📉 Impact and Challenges: - The EU ETS has successfully reduced emissions, especially in the power sector, achieving a 41% reduction compared to 2005. - However, industry and aviation sectors remain laggards, with minimal progress in decarbonization. - Emission caps have steadily decreased, but an oversupply of free allowances has undermined the "polluter pays" principle. 💡 What's New: - A more ambitious 62% reduction target** for 2030, compared to 2005 levels. - The introduction of ETS2 for buildings and road transport, ensuring even broader coverage. - Carbon Border Adjustment Mechanism (CBAM) to protect against carbon leakage, while encouraging greener practices in heavy industries.    💸 Revenue Use: ETS revenues are directed toward climate action, modernization, and innovation. The challenge remains ensuring that these funds are efficiently deployed to maximize decarbonization efforts and prevent misuse. 🔍 Key Takeaways: While the EU ETS has proven effective in driving emissions down in some sectors, substantial reforms are needed to address its weaknesses. The free allocation of allowances remains a contentious issue, enabling some industries to profit without reducing their carbon footprint. 👉 It's clear that while the EU ETS has laid the groundwork, more ambitious actions are required to reach net-zero targets. With reforms like the Market Stability Reserve and the expansion of the ETS to additional sectors, the system is evolving, but vigilance is needed to ensure it delivers on its promises. 📚 To learn more, check out the full report [here] or message me for insights. #ClimateAction #EUETS #CarbonMarkets #Sustainability #Decarbonization #GreenTransition Venu Borra Chris Sunderman Dr. Neha Jain Kamlesh Nagware Amine Echtati Jonathan Garcia Erik Valiquette, CCLP Sami Bousri Harley Hermanson

“Instead of bringing removals into the ETS, the bloc needs to first focus on driving investments into overcoming the limitations around permanent CDR” Carbon Pulse recently recapped the key takeaways from our latest policy brief. 👇 The future role of carbon dioxide removals (CDR) is becoming a key topic in EU climate policy discussions. The development of methodologies under the new Carbon Removal and Carbon Farming (#CRCF) regulations is seen by some as paving the way for the potential future inclusion of certain types of removals in the #EUETS. “But the idea of allowing CDR credits into the ETS is raising concerns and drawing criticism among some parties,” writes Sara Stefanini in her article. Here are some of the key points we highlighted in our brief: ➡️ Permanent #carbonremovals need to mature and demonstrate real net removal benefits before even being considered for integration into the ETS. ➡️ The surplus of allowances accumulated in the ETS can meet demand under current policy scenarios until 2040. Allowing CDR credits into the ETS could worsen oversupply issues and deter emissions abatement. ➡️ Until permanent CDR can prove equivalence to abated #CO2, their inclusion risks spiralling emissions. Even if this equivalence is proven, there is the risk of deterring crucial emissions reductions. 💡 For now, investment into permanent CDR is needed to develop these technologies and ensure their environmental integrity and ability to remove CO2 in real-world conditions, instead of rushing their integration into the ETS. Want to learn more? Read the full article 👉 https://lnkd.in/e6SRQf2G #climateaction

🚨EU Emissions Trading System revenue must be used to support people, not polluters, NGOs demand As the new European Commission begins its mandate, we urge policymakers to use the revenue raised from the EU Emissions Trading System (ETS) wisely. The €200 billion expected to be raised by 2030 must prioritise real climate action and shield vulnerable citizens from the costs of the transition. Carbon Market Watch and 27 organisations (and counting) are calling for: ✅ Support for low-income groups through ETS2 revenues and  the Social Climate Fund ✅ Amendments to the EU ETS Directive to ensure the "Do No Significant Harm" and additionality principles guide the use of revenue ✅ Focused investments in industrial decarbonisation, phasing out free allowances, and ending indirect cost compensation ✅ Strict monitoring of spending to ensure it follows the ETS Directive The transition to a greener economy must be financed fairly — it’s time to make polluters pay for the transition, both in Europe and globally. ✍️ Let’s ensure ETS revenues truly serve the people and society → Join us in urging the European Commission to prioritise climate and social justice in the use of ETS revenues: https://lnkd.in/dJKTbjJP

How to allocate carbon pricing resources 🌫️💸 As we delve into the implications of CBAM and EU ETS, Francesco Lombardi Stocchetti and Lina Strandvåg Nagell of Bellona Europa examine the role of revenue allocation from these policies in supporting the EU's climate objectives. They argue that these funds must be directed into robust, transparent mechanisms that enforce and enhance industrial decarbonization within and beyond EU borders. ⚖️🌏 The briefing elaborates on various allocation strategies, advocating for a dual approach: reinvesting in local low-carbon technologies while also extending support to international #decarbonisation projects. This approach seeks to balance the need for immediate, impactful climate action with long-term #sustainability goals. 🏭🌿 In light of these insights, how can the #EU develop a cohesive policy that ensures #CBAM and #EUETS revenues are used to maximize their impact on sustainable development worldwide? 💬 #EUClimatePolicy #CarbonPricing #NetZero #carbonbordertax

Glad to join the preparation of the report on the sectoral assessment of the greenhouse gas emissions market (based on pre-war data), the excellent presentation of which was held today by Mykola Iakovenko GHG EMISSIONS ASSESSMENT IN UKRAINE ON THE WAY TO CLIMATE NEUTRALITY AND ETS INTRODUCTION. The report was prepared by Green Deal Ukraїna with the support of Helmholtz-Zentrum Berlin Dr Susanne Nies, Georg Zachmann. During its preparation, we consulted with GIZ, the Center for Anthropogenic Gas Emissions of Ukraine and Germany, among others. In my opinion, despite all data deviations, it provides sufficiently comprehensive figures on the liquidity of the ETS market in Ukraine (the third largest in the EU before the war), which, of course, need to be updated. However, without the implementation of MRV - monitoring, reporting, verification - the system will not start, and we are interested in its operation to make payments based on actual data, not extrapolated ones. This is a very labor-intensive task, which involves clarifying data for each installation, understanding technological processes, and requires a team of people to work almost around the clock. What can be done immediately is to cancel the non-mandatory reporting of emissions by enterprises during martial law. In recent weeks, I have been communicating with the regulator National Energy and Utilities Regulatory Commission and with the State Statistics Service, where they say that the reporting rate has fallen, with only 65% of reports being submitted instead of the minimum threshold of 80%, and not all licensees are submitting reports. Based on this reporting, the corresponding forms for fuel consumption are calculated, which are then sent to the profile structures of the Ministry of Environmental Protection, where emissions are calculated using corrective coefficients, and this reporting is sent to EU partners, etc. In such conditions, when reporting is insufficient, we will not build a sustainable climate policy. And we are facing CBAM payments in 2026 (although we are already assured that everything will be forgiven), the reform of environmental taxes and ETS by 2030 (at the latest, with postponement, so we need to start now and this movement is underway). Next on the agenda is work on other reports: on the impact of CBAM on the Ukrainian economy and on the newly created Decarbonization Fund, which, by the way, could become the place for the allocation of ETS payments.