Members' Research Service By / February 4, 2022

Review of the EU ETS: ‘Fit for 55’ package [EU Legislation in Progress][Policy Podcast]

On 14 July 2021, as part of the ‘Fit for 55’ package, the Commission presented a legislative proposal to review the EU ETS.

@ Parradee / Adobe Stock.

Written by Gregor Erbach with Nela Foukalova (3rd edition, updated on 05.07.2022).

As part of the ‘Fit for 55’ package, the Commission presented a legislative proposal to review the EU Emissions Trading System (ETS). The aim of the review is to align the EU ETS Directive with the EU target set out in the European Climate Law to reduce net greenhouse gas (GHG) emissions by 55 % by 2030, compared to 1990 levels.

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To this end, the amount of emission allowances would be reduced, fewer allowances would be allocated for free, and the ETS would be extended to maritime transport. This would reduce emissions in the ETS sectors by 61 % by 2030, compared to 2005. A separate new emissions trading system would be established for fuel distribution for road transport and buildings. The Innovation Fund and the Modernisation Fund would be enlarged, and Member States would be obliged to spend all of their ETS revenues on climate action.

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In the European Parliament, the proposal has been referred to the Committee on Environment, Public Health and Food Safety (ENVI), with Peter Liese (EPP, Germany) as rapporteur. The Parliament adopted its position in the June II 2022 session, and the Council adopted its general approach on 29 June 2022, enabling the launch of trilogue negotiations.

Versions

Proposal for a directive amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and Regulation (EU) 2015/757
Committee responsible:Environment, Public Health and Food Safety (ENVI)COM(2021) 551
14.7.2021
Rapporteur:Peter Liese (EPP, Germany)2021/0211(COD)
Shadow rapporteurs:Jytte Guteland (S&D, Sweden)
Emma Wiesner (Renew, Sweden)
Michael Bloss (Greens/EFA, Germany)
Danilo Oscar Lancini (ID, Italy)
Alexandr Vondra (ECR, Czechia)
Silvia Modig (The Left, Finland)
Ordinary legislative procedure (COD)
(Parliament and Council
on equal footing – formerly ‘co-decision’)
Next steps expected: Trilogue negotiations

Listen to policy podcast ‘Review of the EU ETS: ‘Fit for 55’ package‘ on YouTube.

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