EU set for carbon market limit ruling
EU member states will start negotiations next week on the EU Emissions Trading Scheme after a key agreement was reached on Wednesday
EU member states will start negotiations next week on the EU Emissions Trading Scheme (ETS) after a key agreement was reached on Wednesday.
Members have agreed to seek a reduction of supply in the carbon market by 2021, despite calls for earlier action.
The EU ETS covers more than 11,000 factories, power station and other installations.
The scheme works on a cap-and-trade system; the total amount of greenhouse gas emissions that can be emitted by the businesses involved is set and an allowance can then be traded.
A Market Stability Reserve would see the amount of emission allowance units that the EU is allowed to auction reduced.
The new deal allows EU governments to being negotiations on the final version of the draft law.
In a statement, the Latvian Presidency said: “The decision is an important step to fight against climate change and paves the way for the reform of the EU greenhouse gas emissions trading scheme. Man-made greenhouse gases are largely responsible for warming the planet and causing climate change.”
The statement explains that a Market Stability Reserve is required to correct the current imbalance in the market after a surplus of emission allowances has accumulated in the system, reaching approximately 2.1 billion in 2013, and as a result weakening the carbon price.
Earlier in 2015 business leaders called for the ETS to be reformed to include a Market Stability Reserve by 2017 with the move is necessary to ensure the low-carbon economy and energy system remains on track.