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Brussels revises guidelines for EU Emission Trading

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Brussels revises guidelines for EU Emission Trading

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(BRUSSELS) - The EU Commission adopted Monday revised guidelines for the EU Emission Trading System in the context of the system for greenhouse gas emission allowance trading post-2021 (the 'ETS Guidelines').

The guidelines, which replace previous Guidelines adopted in 2012, will enter into force on 1 January 2021 with the start of the new ETS trading period.

"To sustainably tackle climate change and achieve our Green Deal objectives, we have to put a price tag on carbon emissions while avoiding carbon leakage," said EC vice-president Margrethe Vestager. The revised ETS Guidelines were an important element of the project, she said: "They enable Member States to support those sectors that, because of indirect emission costs, are most at risk of carbon leakage. At the same time, they help deliver on a cost-effective decarbonisation of the economy by avoiding overcompensation and undue distortions of competition in the Single Market".

The aim of the ETS Guidelines is to reduce the risk of 'carbon leakage', where companies move production to countries outside the EU with less ambitious climate policies, leading to less economic activity in the EU and no reduction in greenhouse gas emissions globally.

In particular, they enable EU Member States to compensate companies in at-risk sectors for part of the higher electricity prices resulting from the carbon price signals created by the EU ETS (so-called 'indirect emission costs').

At the same time, overcompensation of companies would, says the Commission, risk running counter to the price signals created by the EU ETS to promote a cost-effective decarbonisation of the economy and create undue distortions of competition in the Single Market.

Against this background, the revised ETS Guidelines will target aid only at sectors at risk of carbon leakage due to high indirect emission costs and their strong exposure to international trade, set a stable compensation rate of 75% in the new period and exclude compensation for non-efficient technologies, and make compensation conditional upon additional decarbonisation efforts by the companies concerned.

The new Guidelines, the Impact Assessment Report and all supporting documents are available here.

The Commission is also in the process of evaluating and reviewing other State aid guidelines, including the Energy and Environmental Aid Guidelines, to make sure they are fully aligned with the Commission's green and digital objectives.

EU Emission Trading System State aid Guidelines

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