European Union to reform carbon trading scheme


Brussel, 28 February 2017 -
 European ministers of environment agreed on a common approach to reform the European Trading System (ETS). As Miguel Arias Cañete, the European Commissioner for Climate Action and Energy states: “(…) today’s agreement demonstrates once more the European Union’s strong commitment to show leadership on climate action and help drive the global transition to clean energy.” With the environmental and economic costs of climate change rising, this reform is an important step towards creating a greener and more resilient planet.

The Paris Climate Agreement signaled to the global community that the time for climate action is now. This reform brings the EU one step closer to achieving the targets of the Paris Agreement, laid out in Nationally Determined Contributions (NDCs). The EU committed itself to reduce its emissions by 43% (based on the 2005 emission levels) before 2030, which can be facilitated an increasingly efficient carbon trading system.

The European Trading System is a key component of the EU’s policy to combat climate change. It imposes a cap on carbon emissions and establishes a trading system for over 11,000 installations in the power sector and energy intensive industries. The reform aims to cut greenhouse gases while ensuring the protection of energy-intensive industries. It involves lowering the cap on emissions by 2.2% a year until at least 2024 while gradually reducing the number of allowances. This will incentivize a reduction in carbon emissions and adoption of clean technologies. In order to accelerate the creation and adoption of these clean technologies, the EU is establishing a 12bn fund intended to help companies innovate and invest in clean technology. The highest performing 10% of industries will also receive free allowances. 

The European Union is a funding partner of PAGE and supports the Partnership in its mission of helping countries in their transition to inclusive green economy, in line with the Sustainable Development Goals and the Paris Agreement. The European Union's support enables targeted action in PAGE partner countries to mitigate climate change. 

In Burkina Faso, PAGE developed a Green Industry Assessment in Burkina Faso, which identifies potential green industrial policies, and makes a series of recommendations in order to promote green industrialization in the country.  In South Africa, PAGE initiated a Green Economy Trade and Industry Analysis to provide guidance for the development of a resource-efficient, low-carbon and export-oriented industry.

These efforts towards reducing carbon emissions, including reforming industry and trade policies, and mechanisms such as carbon trading schemes, exemplify the innovative and successful efforts towards achieving the Paris Agreement.