The European Commission plans to phase maritime transport into the EU Emissions Trading System from 2023 and improve a mechanism to control the supply of carbon permits as part of the biggest overhaul of the market to date, according to a draft law seen by Bloomberg News.
“The ETS is a core instrument to help the EU achieve the increased 2030 target and a successful and just transitionThe EU carbon market is the 27-nations bloc’s flagship policy tool to cut greenhouse gases. It imposes annually declining caps on around 12,000 installations owned by manufacturers and utilities, and limits emissions from airlines. Companies that discharge less carbon can sell their unused permits, getting an incentive to go green faster.
The reserve’s parameters would be modified to introduce a “buffer MSR intake” when the number of carbon permits in circulation is between 833 million and 1.096 billion. In that case, the amount of permits to be absorbed would be the difference between the number of permits in circulation and the 833 million threshold. As long as there are more than 1.096 billion allowances in circulation, including permits for aviation, the intake rate would remain at 24% until 2030.
The rules on benchmarks that set the basis for free allowances would be toughened and their allocation would be made conditional on decarbonisation efforts in order to encourage the uptake of low-carbon technologies.Additionally, free permits would not be available to sectors covered by a planned carbon import levy.