EU Member States agreed to approve the changes to the emissions plan for reduction of air pollution and use of cleaner technologies.
This occurs after almost two years of discussions and two weeks after MEPs voted to introduce a new directive to update the emissions trading scheme (ETS). The ETS is the EU's key policy aimed at reduction of greenhouse gas emissions from more than 11,000 installations in the energy intensive and power sectors. The policy incorporates a market based cap and trade system which forces industries to purchase allowances to emit carbon to the environment.
One of the drivers for updating the law was the widespread concern, that emissions are not sufficiently capped due to an oversupply of "allowances" on the carbon market. Since 2002, when the ETS was first introduced, the scheme worked well, but after the economic downturn in 2008, the prices of the allowances have plummeted.
In the proposed directive, which is due for deliberation in the European Parliament, the number of allowances will be gradually reduced, which will naturally increase their cost, providing an incentive for industries to develop cleaner technologies. The proposed cap on emissions will be falling by 2,2% a year until at least 2024.
The 10% of industries that have the best performance in terms of their carbon emissions, will receive all their allowances for free. Also a fund of £10.2 bn will be established to help industry to develop and invest in innovative technologies.
European commissioner for climate action and energy, Miguel Arias Canete, said: "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. I count on everybody's best efforts to swiftly initiate the negotiations between the council and parliament."
