Peter Liese: ETS is core of an efficient European climate policy / Nevertheless, compromises make sense / Targeted use of revenues is essential
The European Commission will propose decisive changes to the emissions trading system for heating and road transport, that has been adopted in 2023, in the coming weeks. This has been announced today making an effort to accommodate critics. With the help of the European Investment Bank (EIB), the future revenues of the member states are to be distributed even before the system comes into effect on January 1, 2027. “This so-called ‘frontloading’ will enable the European member states to offer citizens and small and medium-sized companies opportunities for decarbonization in the affected areas before the CO2 price even comes into effect. This is particularly crucial for countries that did not have a CO2 prize so far, or for countries such as France with a high public deficit. The aim of ETS2 is not to burden citizens, but to achieve decarbonization. This must not be forgotten in all the debates. That is why the funds must be used as quickly as possible to enable people to make the transition to low-emission or climate-neutral mobility and climate-friendly heating systems," said the climate policy spokesperson for the largest parliamentary group in the European Parliament (EPP, Christian Democrats), who is, however, speaking on this issue in a personal capacity for the time being, as the European People's Party group has not yet reached a final opinion on this matter.
The second element entails a letter from the EU’s Directorate-General CLIMA announcing a legislative proposal to curb prices more effectively. By this he reacts to a letter signed by 19 member states asking for such improvements to the Market Stability Reserve (MSR). Through a targeted change in the MSR, prices are to be managed more effectively should they get too high. This does not require an additional revision of the legal text, just one amendment to an article. In fact, the ETS2 already provides for a price mechanism. However, experts consider it too weak. This has given room for a lot of speculation about the future price of ETS2 certificates, which is unsettling people. “In my estimation, the price will be significantly lower than current price estimates. I expect the price to be closer to 25 euros than 60 euros in 2027. Certainly, a stronger price cap mechanism will initially mean less incentive to decarbonise and thus cutbacks in climate protection. However, it is important to take into account the concerns of member states into account. In this light, it is legitimate for countries, for example in Eastern Europe, which do not yet have a CO2 price, to push for a cautious start. However, the focus must shift back to the solutions. Member States must not only take advantage of the frontloading offer, but also make better offers to their citizens overall. The Directive stipulates that all funds, not only those from the Social Climate Fund, but also national revenues (which at €275 billion are significantly larger than the €87 billion from the Social Climate Fund) must be spent on citizens and their decarbonisation efforts in transport and heating, taking social aspects into account,” explained MEP Peter Liese.
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