The European Commission (EC) today proposed to make the EU’s carbon pricing system for industry more flexible, extending free allowances for four more years, while reaffirming the commitment to carbon neutrality by 2050.
In a proposal presented today to update the EU Emissions Trading System (EU ETS), the European Commission acknowledges that the elimination of free emission allowances could be extended from 2034 to 2038, provided that industries commit to decarbonization.
In this sense, the Commission wants to create a Bank for Industrial Decarbonization with the aim of making 100 billion euros available to finance industrial decarbonization projects in the EU and to return a higher share of EU ETS revenues to the sectors covered by it.
Since its launch in 2005, the EU ETS has generated more than 270 billion euros in revenues that were reinvested in innovation, in industrial decarbonization and in the modernization of the European energy system, also helping Europe to reduce emissions by 50% in the sectors it covers.
At a press conference, the Executive Vice-President of the European Commission, Teresa Ribera, highlighted that after 20 years the system remains useful but needs updating, particularly in the investment of the revenues it generates into decarbonization, noting that the EU remains committed to the carbon neutrality pledge by 2050.
The EU ETS obliges industries to pay for each tonne of carbon dioxide — or equivalent — that they emit.
The proposal will now be debated by the European Parliament and the Council of the EU in the co-legislation process.
