MNI: EU Member States Plot Further ETS2 Pushback -Officials

A one-year delay in the extension of the European Union’s ETS2 emissions trading scheme to heating and road transport is likely be only the first step in a campaign by several member states to further dilute or even kill the measure, EU officials told MNI.

The Nov 4-5 climate talks in Brussels which resulted in agreement by energy ministers to delay the extension of ETS2 until 2028 ran through the night, with one senior official from an EU state describing the marathon debate and involvement of prime ministers as "unprecedented". 

Postponement was likely to be "just the first step towards the death of ETS2," the same official said, though others were less sure.

"Several member states were asking for a significant postponement. Some member states were pushing for 2030, although only one wanted the option of abolition kept on the table," said another EU source. 

The climate meeting itself followed a summit meeting where a group representing the more industrialised countries of the EU, including Germany, France, Italy, the Netherlands and Belgium advocated for a more pragmatic approach to the green agenda. (See MNI: EC Autumn Inflation Forecast To Assume Mitigated ETS2)

COMPETITIVENESS AGENDA

"The EU remains committed to climate goals, but they are working through a different lens now, they want to ensure that this doesn't come at the expense of competitiveness and industry. It's definitely a shift compared to five years ago," an official said.  

In a recent letter on the topic Commission President Ursula von der Leyen mooted the simplification and revision of ETS2 in order to soften its impact on consumers and businesses, including measures such as frontloading ETS2 revenues to give states more fiscal room to respond and reinforcing market mechanisms to prevent excessive spikes in gas prices. (See MNI INTERVIEW: ECB In Good Place But Not Complacent - Kazaks)

"But some member states have signalled that doesn't go far enough," the first EU source added. 

The amended climate law draft will now go to the European Parliament and into a process called "Trialogues" - likely to take months - where the three EU legislating institutions - the Commission, the Parliament and Council (EU states) hammer out a compromise.   

The Commission is also set to come forward in the next week or two with proposals for the mitigation of ETS2.