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EU Deadlocked Over Carbon Market Reform


After more than a year of negotiations, EU member states have come up short in their efforts to find common ground on a carbon market reform seen as necessary if the ambitions of the Paris Agreement on climate change are to be met.

Meeting at the final ministerial council chaired by the outgoing Slovak presidency yesterday (19 December), environment ministers appeared at odds over the planned reform of the Emissions Trading Scheme, the EU’s main tool to fight climate change and reward clean energy.

Negotiations kicked off more than a year ago but despite a big push by the presidency, there has been a “lack of political will” around the European Commission’s initial proposal, said László Sólymos, the Slovak Environment Minister who chaired the meeting.

Polish opposition

“Everyone agrees that carbon prices must go up,” Climate Commissioner Miguel Arias Cañete said at the beginning of the meeting in an attempt to find a consensus.

That turned out to be somewhat of an optimistic comment though, when Poland’s environment minister retorted that the price of CO2 “should not be influenced by the stability reserve”, the EU Commission’s proposed tool to manage the amount of carbon permits on the market and keep prices high.

“We still need to discuss this,” said Jan Szyszko, Poland’s environment minister.

Warsaw warned that EU member states “have not understood the spirit of the Paris Agreement”, saying each country should be allowed to go their own way with their own national legislation on climate change.

The other member states were less vehement in their criticism but rallied against the Commission’s plan nonetheless.

Call for simplicity

EU countries seem to converge on their rejection of the Commission’s proposed “cross-sectoral correction factor (CSCF)”, a mechanism that would distribute free allocations to the top 10% of industry performers in terms of CO2 reductions.

The Commission’s proposal was generally seen as too complicated, with a majority of member states arguing for more straightforward market regulation instruments.

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