Aug. 22 (Bloomberg) -- The U.K. wants the European Commission to propose by the end of this year draft legislation to strengthen the EU emissions trading system after 2020, according to the Department of Energy & Climate Change.
The 28-nation European Union is considering options to overhaul its carbon market after the price of emission permits tumbled to a record low in April. The commission, the bloc’s regulatory arm, last year floated six scenarios to improve the system and has signaled it will take its next steps before the end of December.
“The U.K. wants to see legislative proposals for substantive structural reform of the EU ETS on the table by the end of the year at the latest,” DECC said today in an e-mailed statement. The U.K. favors a 40 percent cut in greenhouse-gas emissions by 2030 from 1990 levels. “Any reform proposals should bring the EU ETS into line with this,” DECC said.
Europe’s 54 billion-euro ($72 billion) carbon market is the bloc’s key tool to meet its target to reduce emissions by 20 percent in 2020 from 1990. The commission has said the best scenario would be to cut pollution 40 percent by 2030 and included setting new goals for the next decade among its ETS overhaul options in last year’s report on carbon markets.
“In developing a detailed position on structural reforms we are considering a wide range of options, including those in the Commission’s Carbon Market Report,” DECC said. “A strong EU ETS is a cost-effective measure to deliver our longer-term greenhouse gas targets, provide long-term certainty for investors, and ensure the EU continues to show leadership on taking climate action globally.”
The EU’s eight-year-old carbon market allocates tradable permits to factories and utilities that must surrender enough to cover their emissions or pay fines. Weak economic growth cut demand for the allowances, sending prices to record lows and reducing incentives to invest in low-carbon technologies.
The debate on overhauling the EU market coincides with discussions about the bloc’s broader climate and energy policies for 2030. A post-2020 framework is needed to give investors legal certainty, spur innovation and prepare for a global climate deal in 2015, the commission said in March.
EU leaders decided in May that they will discuss the new framework at their gathering in March 2014 after the commission “comes forward with more concrete proposals.”
--Editors: Andrew Reierson, Matthew Brown