REPORT on the proposal for a decision of the European Parliament and of the Council amending Decision (EU) 2015/1814 as regards the amount of allowances to be placed in the market stability reserve for the Union greenhouse gas emission trading scheme until 2030

16.3.2022 - (COM(2021)0571 – C9‑0325/2021 – 2021/0202(COD)) - ***I

Committee on the Environment, Public Health and Food Safety
Rapporteur: Cyrus Engerer


Procedure : 2021/0202(COD)
Document stages in plenary

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a decision of the European Parliament and of the Council amending Decision (EU) 2015/1814 as regards the amount of allowances to be placed in the market stability reserve for the Union greenhouse gas emission trading scheme until 2030

(COM(2021)0571 – C9‑0325/2021 – 2021/0202(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

 having regard to the Commission proposal to Parliament and the Council (COM(2021)0571),

 having regard to Article 294(2) and Article 192(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C9‑0325/2021),

 having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

 having regard to the opinion of the European Economic and Social Committee of 8 December 2021[1],

 after consulting the Committee of the Regions,

 having regard to Rule 59 of its Rules of Procedure,

 having regard to the opinion of the Committee on Industry, Research and Energy,

 having regard to the report of the Committee on the Environment, Public Health and Food Safety (A9-0045/2022),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.


 

Amendment  1

Proposal for a decision

Recital 1

 

Text proposed by the Commission

Amendment

(1) The Paris Agreement, adopted in December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) entered into force in November 2016 (“the Paris Agreement”)3 The Parties to the Paris Agreement have agreed to hold the increase in the global average temperature well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1,5 °C above pre-industrial levels.

(1) The Paris Agreement, adopted in December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) entered into force in November 2016 (“the Paris Agreement”)3. The Parties to the Paris Agreement have agreed to hold the increase in the global average temperature well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1,5 °C above pre-industrial levels. By adopting the Glasgow Climate Pact, the Parties to the Paris Agreement recognised that limiting the increase in the global average temperature to 1,5 °C above pre-industrial levels would significantly reduce the risks and impacts of climate change, and they committed to strengthening their 2030 targets by the end of 2022 to close the ambition gap, in line with the findings of the Intergovernmental Panel on Climate Change (IPCC). This should be done in a manner that is equitable and respects the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances. The revision of the European Union Emissions Trading System (EU ETS), including of its market stability reserve, is a unique opportunity to contribute to stepping up the Union's climate action before the 27th session of the Conference of the Parties (COP 27) to the UNFCCC in Egypt.

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3 Paris Agreement (OJ L 282, 19.10.2016, p. 4).

3 Paris Agreement (OJ L 282, 19.10.2016, p. 4).

Amendment  2

Proposal for a decision

Recital 1 a (new)

 

Text proposed by the Commission

Amendment

 

(1a) The urgency of the need to keep the Paris Agreement goal of 1,5 °C alive has become more significant following the findings of the IPCC in its report of 7 August 2021 entitled ‘Climate Change 2021: The Physical Science Basis’. The IPCC found that global temperature will reach or exceed the 1,5 °C mark earlier than previously anticipated, namely within the next 20 years. It also found that unless there are immediate and ambitious reductions in greenhouse gas emissions, it will no longer be possible to limit global warming to close to 1,5 °C or even 2 °C.

Amendment  3

Proposal for a decision

Recital 1 b (new)

 

Text proposed by the Commission

Amendment

 

(1b) In its resolution of 28 November 2019 on the climate and environment emergency1a, the European Parliament urged the Commission to take immediate and ambitious action to limit global warming to 1,5 °C and to avoid massive biodiversity loss, including by addressing the inconsistencies of current Union policies on the climate and environment emergency and by ensuring that all relevant future legislative and budgetary proposals are fully aligned with the objective of limiting global warming to under 1,5 °C and that they do not contribute to biodiversity loss.

 

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1a OJ C 232, 16.6.2021, p. 28.

Amendment  4

Proposal for a decision

Recital 1 c (new)

 

Text proposed by the Commission

Amendment

 

(1c) The need for urgent action is further intensified by the increase in the frequency and intensity of extreme weather conditions as a direct result of climate change. According to the United Nations Office for Disaster Risk Reduction, the number of disasters recorded worldwide and the scale of global economic losses have nearly doubled in the last 20 years, much of which increase corresponds to the significant rise in the number of climate-related disasters.

Amendment  5

Proposal for a decision

Recital 1 d (new)

 

Text proposed by the Commission

Amendment

 

(1d) The Union should therefore address this urgency by stepping up its efforts and establishing itself as an international leader in the fight against climate change, while reflecting the principles of equity and of common but differentiated responsibilities and respective capabilities, as laid down in Article 2(2) of the Paris Agreement.

Amendment  6

Proposal for a decision

Recital 2

 

Text proposed by the Commission

Amendment

(2) Tackling climate and environmental-related challenges and reaching the objectives of the Paris Agreement are at the core of the Communication on “The European Green Deal”, adopted by the Commission on 11 December 20194.

(2) Tackling climate and environmental-related challenges and reaching the objectives of the Paris Agreement are therefore at the core of the Communication on “The European Green Deal”, adopted by the Commission on 11 December 20194.

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4 COM(2019)640 final.

4 COM(2019)640 final.

Amendment  7

Proposal for a decision

Recital 3

 

Text proposed by the Commission

Amendment

(3) The European Green Deal combines a comprehensive set of mutually reinforcing measures and initiatives aimed at achieving climate neutrality in the EU by 2050, and sets out a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy, where economic growth is decoupled from resource use. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. At the same time, this transition affects women and men differently and has a particular impact on some disadvantaged groups, such as older people, persons with disabilities and persons with a minority racial or ethnic background. It must therefore be ensured that the transition is just and inclusive, leaving no one behind.

(3) The European Green Deal provides the starting point for the achievement of the Union’s climate-neutrality objective by 2050, at the latest, and the aim to achieve negative emissions thereafter, as laid down in Article 2(1) of Regulation (EU) 2021/1119 of the European Parliament and of the Council1a. It sets out a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy, while leaving no one behind in a just transition that also addresses energy poverty. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. This transition affects workers from various sectors and each gender differently and has a particular impact on some disadvantaged and vulnerable groups, such as older people, persons with disabilities, persons with a minority racial or ethnic background and low and lower-middle income individuals and households. It also imposes greater challenges on certain regions, in particular structurally disadvantaged and peripheral regions, as well as islands. It must therefore be ensured that the transition is just and inclusive.

 

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1a Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1).

Amendment  8

Proposal for a decision

Recital 4

 

Text proposed by the Commission

Amendment

(4) The necessity and value of the European Green Deal have only grown in light of the very severe effects of the COVID-19 pandemic on the health, living and working conditions and well-being of the Union’s citizens, which have shown that our society and our economy need to improve their resilience to external shocks and act early to prevent or mitigate them. European citizens continue to express strong views that this applies in particular to climate change5.

(4) The necessity and value of a well-implemented European Green Deal have only grown in light of the very severe effects of the COVID-19 pandemic on the health, living and working conditions and well-being of the Union’s citizens, which have shown that our society and our economy need to improve their resilience to external shocks and act early to prevent or mitigate them in a manner that is just and results in no one being left behind, including those at risk of energy poverty. European citizens continue to express strong views that this applies in particular to climate change5.

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5 Special Eurobarometer 513 on Climate Change, 2021 (https://ec.europa.eu/clima/citizens/support_en).

5 Special Eurobarometer 513 on Climate Change, 2021 (https://ec.europa.eu/clima/citizens/support_en).

Amendment  9

Proposal for a decision

Recital 4 a (new)

 

Text proposed by the Commission

Amendment

 

(4a) The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), in its report of 29 October 2020 entitled ‘Biodiversity and Pandemics’, pointed out that the underlying causes of pandemics are the same global environmental changes that drive biodiversity loss and climate change. Climate change should therefore be mitigated in order to sustain and improve the health of our biodiversity, in turn protecting human health.

Amendment  10

Proposal for a decision

Recital 6

 

Text proposed by the Commission

Amendment

(6) In Regulation (EU) 2021/1119 of the European Parliament and of the Council7 the Union has enshrined the target of economy-wide climate neutrality by 2050 in legislation. That Regulation also establishes a binding Union domestic reduction commitment of net greenhouse gas emissions (emissions after deduction of removals) of at least 55 % below 1990 levels by 2030.

(6) In Regulation (EU) 2021/1119 the Union has enshrined in legislation the target of economy-wide climate neutrality by 2050, at the latest, and the aim to achieve negative emissions thereafter. That Regulation also establishes a binding Union domestic reduction commitment of net greenhouse gas emissions (emissions after deduction of removals) of at least 55 % below 1990 levels by 2030. This should be carried out as a just transition where no one is left behind.

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7 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1).

 

Amendment  11

Proposal for a decision

Recital 7

 

Text proposed by the Commission

Amendment

(7) All sectors of the economy need to contribute to achieving those emission reductions. Therefore, the ambition of the EU Emissions Trading System (EU ETS), established by Directive 2003/87/EC of the European Parliament and of the Council8, should be adjusted to be in line with the economy-wide net greenhouse gas emissions reduction commitment for 2030.

(7) All sectors of the economy need to contribute to achieving those emission reductions. Therefore, the ambition of the EU Emissions Trading System (EU ETS), established by Directive 2003/87/EC of the European Parliament and of the Council8 should be adjusted to be in line with the economy-wide net greenhouse gas emissions reduction commitment for 2030, the Union’s climate-neutrality objective to be achieved by 2050, at the latest, and the aim to achieve negative emissions thereafter, as laid down in Article 2(1) of Regulation (EU) 2021/1119.

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8 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a system for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).

8 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a system for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).

Amendment  12

Proposal for a decision

Recital 8

 

Text proposed by the Commission

Amendment

(8) In order to address the structural imbalance between supply and demand of allowances in the market, Decision (EU) 2015/1814 of the European Parliament and of the Council9 established a market stability reserve (the ‘reserve’) in 2018, which has been operational since 2019.

(8) In order to address the structural imbalance between supply and demand of allowances in the market, which weakened the EU ETS through lower carbon prices, thus preventing the EU ETS from providing strong incentives for emissions reduction, Decision (EU) 2015/1814 of the European Parliament and of the Council9 established a market stability reserve (the ‘reserve’) in 2018, which has been operational since 2019. The creation of the reserve contributed to reducing  the surplus of allowances in circulation by 29 % in 2019 from its record level in 2013. However, according to the 2021 Carbon Market Report, the total number of allowances in circulation increased again in 2020 to 1 579 billion allowances, compared to 1 385 billion allowances in 2019. That sharp increase in the overall surplus was linked to a lower demand due to the COVID-19 crisis. The Commission estimates that it will take up to four years for that additional 2020 surplus to be absorbed, thereby further delaying the urgent need to absorb the historical surplus and make the EU ETS fit for purpose. Therefore, and without prejudice to further revisions of the reserve as part of the general revision of Directive 2003/87/EC and Decision (EU) 2015/1814 taking place in 2022, the Commission should continuously monitor the functioning of the reserve and ensure that the reserve is kept fit for purpose in case of future unforeseeable external shocks.

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9 Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ L 264, 9.10.2015, p. 1).

9 Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ L 264, 9.10.2015, p. 1).

Amendment  13

Proposal for a decision

Recital 8 a (new)

 

Text proposed by the Commission

Amendment

 

(8a) A robust and forward-looking reserve is essential to ensure the integrity of and effectively steer the EU ETS in order for it to contribute, as a policy tool, to achieving the Union’s climate-neutrality objective by 2050, at the latest, and the aim to achieve negative emissions thereafter as laid down in Article 2(1) of Regulation (EU) 2021/1119. The EU ETS, and therefore the reserve, should also be aligned with the efforts to limit the global temperature increase to 1,5°C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change, while reflecting equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances, as laid down in Article 2 of the Paris Agreement.

Amendment  14

Proposal for a decision

Recital 10

 

Text proposed by the Commission

Amendment

(10) Where the number of allowances in circulation is above the established upper threshold, an amount of allowances corresponding to a given percentage of these allowances is deducted from the volumes of allowances to be auctioned and placed in the reserve. Meanwhile, a corresponding number of allowances is released from the reserve to Member States, and added to the volumes of the allowances to be auctioned, if the total number of allowances in circulation falls below the established lower threshold.

(10) Currently, where the number of allowances in circulation is above the established upper threshold, an amount of allowances corresponding to a given percentage of these allowances is deducted from the volumes of allowances to be auctioned and placed in the reserve. Meanwhile, a corresponding number of allowances is released from the reserve to Member States, and added to the volumes of the allowances to be auctioned, if the total number of allowances in circulation falls below the established lower threshold.

Amendment  15

Proposal for a decision

Recital 11

 

Text proposed by the Commission

Amendment

(11) Directive (EU) 2018/410 of the European Parliament and of the Council10 amended Decision (EU) 2015/1814 by doubling the percentage rate to be used for determining the number of allowances to be placed each year in the reserve from 12 % to 24 % until 31 December 2023.

(11) Directive (EU) 2018/410 of the European Parliament and of the Council10 amended Decision (EU) 2015/1814 by doubling the percentage rate to be used for determining the number of allowances to be placed each year in the reserve from 12 % to 24 % until 31 December 2023, as a way of rapidly absorbing the historical surplus in order to provide a stronger price signal to reduce greenhouse gas emissions in a cost-efficient manner. That decision was taken in the context of the former Union 2030 climate target of reducing economy-wide greenhouse gas emissions by at least 40 % compared to 1990 levels.

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10 Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814 (OJ L 76, 19.3.2018, p. 3).

10 Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814 (OJ L 76, 19.3.2018, p. 3).

Amendment  16

Proposal for a decision

Recital 14

 

Text proposed by the Commission

Amendment

(14) The analysis carried out in the context of the reserve’s review and the expected developments relevant to the carbon market demonstrate that a rate of 12 % of the total number of allowances in circulation to be placed in the reserve each year after 2023 is insufficient to prevent a significant increase of the surplus of allowances in the EU ETS. Therefore, after 2023 the percentage figure should continue to be 24 %, and the minimum number of allowances to be placed in the reserve should also continue to be 200 million.

(14) The analysis carried out in the context of the reserve’s review and the expected developments relevant to the carbon market demonstrate that a rate of 12 % of the total number of allowances in circulation to be placed in the reserve each year after 2023 is insufficient to prevent a significant increase of the surplus of allowances in the EU ETS. If the rate of the total number of allowances in circulation to be placed in the reserve each year reverts to 12 % after 2023, a significant and harmful surplus of allowances in the EU ETS could disturb market stability and the proper functioning of the EU ETS, and as a result jeopardise the achievement of greenhouse gas emission reductions necessary to meet legally binding climate targets, as referred to in the impact assessment that was carried out by the Commission for this Decision.

Amendment  17

Proposal for a decision

Recital 15

 

Text proposed by the Commission

Amendment

(15) If the rate of the total number of allowances in circulation to be placed in the reserve each year reverts to 12 % after 2023, a potentially harmful surplus of allowances in the EU ETS may disturb market stability. In addition, the rate of 24 % after 2023 should be established separately from the general review of Directive 2003/87/EC and Decision (EU) 2015/1814 to strengthen the EU Emissions Trading System in line with the Union’s increased climate ambition for 2030 to ensure market predictability.

(15) Therefore, it is important to ensure that the rate does not revert to below 24 % after 2023 and that the minimum number of allowances to be placed in the reserve does not fall below 200 million. This should be done separately from the general review of Directive 2003/87/EC and Decision (EU) 2015/1814 to strengthen the EU Emissions Trading System in line with the Union’s increased climate ambition for 2030 to ensure its timely entry into force, and thereby provide market predictability by eliminating the risk that the rate falls back below 24 %. Maintaining the rate of 24 % in this Decision should be without prejudice to further revisions of the reserve, including, if appropriate, revision of the rate of allowances to be placed in the reserve, as part of the general revision of Directive 2003/87/EC and Decision (EU) 2015/1814 taking place in 2022.

Amendment  18

Proposal for a decision

Recital 15 a (new)

 

Text proposed by the Commission

Amendment

 

(15a) The rate of 24 % after 2023 should be established separately from the general review of Directive 2003/87/EC and Decision (EU) 2015/1814 to strengthen the EU ETS in line with the Union’s increased climate ambition for 2030 to ensure that there is market predictability.

Amendment  19

Proposal for a decision

Recital 15 b (new)

 

Text proposed by the Commission

Amendment

 

(15b) Since the objective of this Decision, namely the continuation of the current parameters of the market stability reserve as established pursuant to Directive (EU) 2018/410, cannot be sufficiently achieved by the Member States but can rather, by reason of its scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Decision does not go beyond what is necessary in order to achieve that objective.

 


EXPLANATORY STATEMENT

 

Climate change is a global emergency, which is affecting countries across continents through economic disruptions, extreme weather conditions and rises in sea levels. According to the recent IPCC Report[2] issued in August 2021, we are currently witnessing changes in our climate that are unprecedented in thousands, if not hundreds of thousands of years. Climate change is already impacting the lives of millions of people around the world and threatening each and every one of us.

 

Global efforts are needed if we are to mitigate the devastating effects of this phenomenon. Attempting to limit effects through ambitious reductions in greenhouse gas emissions while at the same time ensuring a just transition and maintaining our economies competitive is the biggest political project of our time.  This can only be a success story if backed up by an international effort.

 

The European Union is a global leader in the fight against climate change.  It has stepped up its efforts and has equipped itself with the necessary tools that reflect the ambition needed to be able to meet the global challenges presented. Through the adoption of the European Green Deal communication, the EU has forged its path towards a green transition which is based on a resource-efficient and competitive economy, which ensures that no one is left behind.  A clear global signal has been sent with the commitment to make Europe the first climate-neutral continent by 2050. 

 

The transformation being set forth through the European Green Deal is also intrinsically interlinked with the recovery from the COVID-19 pandemic. The pandemic has forced the world to rethink its priorities and has made it ever more clear that human health and the health of our environment and biodiversity are inherently connected and co-dependent. It has led to a renewed commitment to the preservation of our environment and the need to build back our economies in a way which stirs the course of our future towards a different, more sustainable, path for the benefit of our planet, and in turn, our health. This renewed commitment has come to life and manifested itself through NextGenerationEU, - one of the financial instruments that will see the European Green Deal implemented.

 

Through the adoption of the EU Climate law, Europe continued to demonstrate its willingness to go from words to action by securing a legally binding commitment to make Europe a climate neutral continent by 2050.  At the same time, emissions must be reduced by at least 55% by 2030 when compared to 1990 levels. This increased climate ambition must now be implemented in practice and the EU must now revisit its policies and existing mechanisms to reflect these new targets. It needs to ensure that all economic sectors contribute to this ambition and therefore one of the key priorities is to strengthen the environmental contribution of its Emissions Trading System. This is in fact one of the key revisions which is being fleshed out in the Fit for 55 package which revisits the EU 2030 climate and energy framework to bring it in line with the new climate targets set out in the Climate law.

 

In an attempt to avoid the weakening of the ETS system in view of a surplus of emission allowances that had been accruing since 2009, the European Commission had established a Market Stability Reserve in 2018 as a long-term solution which has been operational since 2019. After establishing this reserve in 2018, the Commission also adjusted the rules for placing allowances in the reserve and releasing them from it temporarily until 2023 through Directive (EU) 2018/410 of the European Parliament and of the Council. It doubled the percentage from the total number of allowances in circulation (the intake rate) which is reserved from 12% to 24%, and the minimum amount to be placed in the reserve from 100 to 200 million allowances.

 

Both the introduction of the reserve and the subsequent adjustment in its operational rules were important steps towards maintaining an emissions trading system which is fit for purpose and which adapts to the dynamic needs of the economic sectors covered by the ETS, such as the impact of the COVID-19 pandemic on these sectors. Their ultimate aim was to address the surplus of allowances and to improve the resilience of the ETS to major shocks. These targets are even more relevant today given the need to match the increased climate ambition and to avoid a situation where the ETS is weakened through lower carbon prices leading to fewer incentives for emission reductions.

 

The Commission proposal which we have in front of us seeks to maintain the temporary adjustments to the reserve which were adopted through Directive 2018/410 until the end of Phase IV of the EU ETS on 31 December 2030. The need for the extension of this temporary adjustment is clear. Failure to move forward with this extension in a timely manner can lead to a harmful increase in the surplus of emission allowances and will run counter to the increased ambition presented in the Green deal and legislated upon in the Climate law.

 

Europe must look forward in its climate path by strengthening the tools it has in place and rendering them more resilient to external factors. This is not the time to weaken the EU ETS by taking any steps back in our climate ambition. The extension of the temporary adjustments being put forward through this Commission proposal are therefore necessary and urgent and fully in line with Europe’s global role in the fight against climate change.


OPINION OF THE COMMITTEE ON INDUSTRY, RESEARCH AND ENERGY (4.3.2022)

for the Committee on the Environment, Public Health and Food Safety

on the proposal for a decision of the European Parliament and of the Council amending Decision (EU) 2015/1814 as regards the amount of allowances to be placed in the market stability reserve for the Union greenhouse gas emission trading scheme until 2030

(COM(2021)0571 – C9‑0325/21 – 2021/0202(COD))

Rapporteur for opinion: Claudia Gamon

 

SHORT JUSTIFICATION

Climate change is the biggest and most important global challenge for our and for further generations. Real reforms are necessary to tackle climate change by designing our society more sustainable, long-lasting and climate friendly. The economy and the environment must be considered in conjunction with one another and as keys to reach climate neutrality.

The European Climate Law, as a central element of the European Green Deal, sets the binding target of reducing the EU’s GHG emissions by 55 % by 2030 and eventually of becoming the first climate neutral continent by 2050.

The EU Emission Trading scheme (ETS) has proven to be an effective tool for the EU to reduce its Greenhouse Gas Emissions by drawing a clear path towards reaching the EU’s climate targets. To ensure that the ETS remains an effective, strong and shock resistant tool, in 2018 the European Union established, further to the Decision 2015/1814, the Market Stability Reserve (MSR), which became operational as of 2019. This Decision formulates clear rules to address a surplus of allowances by triggering a mechanism to put allowances in the reserve and releasing them if needed. To avoid a weakening of the ETS due to low carbon prices, the volume of the allowances to be placed in the MSR was doubled when the ETS was revised by the European Parliament and the Council via Directive 2018/410: the minimum intake amount was raised from 100 to 200 million allowances and the percentage of the total number of allowances in circulation from 12 to 24 %. These measures would remain in place until 2023.

In their impact assessment in the context of the review of the MSR decision, the Commission concluded, that, in order to avoid a surplus of allowances and a weakening of the ETS, the continuation of the current measures until 2030 is the most favourable solution (intake rate of 24 % and the minimum amount of allowances to be placed into the reserve of 200 million allowances). Furthermore it should be noted that, if these measures will not be adopted in a timely manner, it might result in a risk of a harmful increase of the surplus of allowances.

For these reasons, the rapporteur proposes to maintain the measures as proposed to enable the swift implementation and ensure a smooth functioning of the MSR.

AMENDMENTS

The Committee on Industry, Research and Energy calls on the Committee on the Environment, Public Health and Food Safety, as the committee responsible, to take into account the following amendments:

Amendment  1

 

Proposal for a decision

Recital 1

 

Text proposed by the Commission

Amendment

(1) The Paris Agreement, adopted in December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) entered into force in November 2016 (“the Paris Agreement”)25. The Parties to the Paris Agreement have agreed to hold the increase in the global average temperature well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1,5 °C above pre-industrial levels.

(1) The Paris Agreement, adopted in December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) entered into force in November 2016 (“the Paris Agreement”)25. In its Special Reports published between 2018 and 2021, the Intergovernmental Panel on Climate Change (IPCC) illustrated the need to urgently reduce greenhouse gas (GHG) emissions in all sectors of the economy in order to limit global warming to 1,5°C and not to risk reaching or exceeding this threshold. Without immediate and ambitious greenhouse gas emissions, it will no longer be possible to limit global warming in line with the goals set by the Paris Agreement. By adopting the Glasgow Climate Pact, the Parties to the Paris Agreement recognised that limiting the increase in the global average temperature to 1,5°C above pre-industrial levels would significantly reduce the risks and impacts of climate change, and committed to strengthen their 2030 targets to close the ambition gap. The revision of the EU ETS, including of its Market Stability Reserve, is a unique opportunity to contribute to stepping up the Union’s climate action before COP27 in Egypt.

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25 Paris Agreement (OJ L 282, 19.10.2016, p. 4).

25 Paris Agreement (OJ L 282, 19.10.2016, p. 4).

Amendment  2

Proposal for a decision

Recital 1 a (new)

 

Text proposed by the Commission

Amendment

 

(1a) The need for urgent action is further intensified by the increase in the frequency and intensity of extreme weather conditions as a direct result of climate change. According to the United Nations Office for Disaster Risk Reduction, the number of disasters recorded worldwide and the scale of global economic losses have nearly doubled in the last 20 years, much of which increase corresponds to the significant rise in the number of climate-related disasters.

Amendment  3

Proposal for a decision

Recital 1 b (new)

 

Text proposed by the Commission

Amendment

 

(1b) The Union should therefore address this urgency by stepping up its efforts and establishing itself as an international leader in the fight against climate change.

Amendment  4

 

Proposal for a decision

Recital 3

 

Text proposed by the Commission

Amendment

(3) The European Green Deal combines a comprehensive set of mutually reinforcing measures and initiatives aimed at achieving climate neutrality in the EU by 2050, and sets out a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy, where economic growth is decoupled from resource use. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. At the same time, this transition affects women and men differently and has a particular impact on some disadvantaged groups, such as older people, persons with disabilities and persons with a minority racial or ethnic background. It must therefore be ensured that the transition is just and inclusive, leaving no one behind.

(3) The European Green Deal combines a comprehensive set of mutually reinforcing measures and initiatives aimed at achieving climate neutrality in the EU by 2050, and sets out a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy, where economic growth is decoupled from resource use. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. At the same time, this transition affects workers from various sectors and women and men differently, and has a particular impact on some disadvantaged groups, such as older people, persons with disabilities and persons with a minority racial or ethnic background. It must therefore be ensured that the transition is just and inclusive, leaving no one behind.

Amendment  5

 

Proposal for a decision

Recital 3 a (new)

 

Text proposed by the Commission

Amendment

 

(3a) Research and innovation will greatly contribute to achieving the ambitious goals of the ‘European Green Deal’, to make Europe the world's first climate-neutral economic area by 2050 and to transform climate and environmental challenges into opportunities. There is an urgent need for investment in innovation aiming to bring to market industrial solutions and zero-carbon technologies to decarbonise Europe and support its transition to climate neutrality. In particular, the Innovation Fund should focus on highly innovative technologies and supporting businesses, in particular SMEs, to create local, decent and future-proof jobs, and reinforce European technological leadership on a global scale.

Amendment  6

Proposal for a decision

Recital 8

 

Text proposed by the Commission

Amendment

(8) In order to address the structural imbalance between supply and demand of allowances in the market, Decision (EU) 2015/1814 of the European Parliament and of the Council31 established a market stability reserve (the ‘reserve’) in 2018, which has been operational since 2019.

(8) In order to address the structural imbalance between supply and demand of allowances in the market, which threatened to weaken the EU ETS through lower carbon prices leading to fewer incentives for long-term investment aimed at reducing emissions , Decision (EU) 2015/1814 of the European Parliament and of the Council9 established a market stability reserve (the ‘reserve’)in 2018, which has been operational since 2019.

__________________

__________________

31 Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ L 264, 9.10.2015, p. 1).

31 Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ L 264, 9.10.2015, p. 1).

Amendment  7

 

Proposal for a decision

Recital 8 a (new)

 

Text proposed by the Commission

Amendment

 

(8a) To effectively align emissions trading with the 2030 climate targets, strengthen the resilience of the EU ETS in respect of price shocks, and increase planning certainty for the development of and investment in decarbonisation technologies, ad hoc interventions in the market stability reserve should be carefully scrutinized and where possible avoided.

Amendment  8

Proposal for a decision

Recital 11 a (new)

 

Text proposed by the Commission

Amendment

 

(11a) Adjustment of the percentage rate to be used for determining the number of allowances to be placed each year in the reserve was necessary in order to ensure that the EU ETS would remain fit for purpose and resilient in the face of external factors which might represent obstacles on the path which the Union has forged in its fight against climate change.

Amendment  9

 

Proposal for a decision

Recital 12 a (new)

 

Text proposed by the Commission

Amendment

 

(12a) Any review and adjustment of the market stability reserve should aim to minimize regulatory complexity and market speculation, while ensuring a maximum degree of market predictability and that the EU ETS is fit for purpose in line with the Union’s increased climate ambition for 2030.

Amendment  10

 

Proposal for a decision

Recital 15

 

Text proposed by the Commission

Amendment

(15) If the rate of the total number of allowances in circulation to be placed in the reserve each year reverts to 12 % after 2023, a potentially harmful surplus of allowances in the EU ETS may disturb market stability. In addition, the rate of 24 % after 2023 should be established separately from the general review of Directive 2003/87/EC and Decision (EU) 2015/1814 to strengthen the EU Emissions Trading System in line with the Union’s increased climate ambition for 2030 to ensure market predictability.

(15) If the rate of the total number of allowances in circulation to be placed in the reserve each year reverts to 12 % after 2023, a potentially harmful surplus of allowances in the EU ETS may disturb market stability. In addition, the rate of 24 % after 2023 should be established separately from the general review of Directive 2003/87/EC and Decision (EU) 2015/1814 to strengthen the EU Emissions Trading System in line with the Union’s increased climate ambition for 2030 to ensure its timely entry into force and thereby provide market predictability by eliminating the risk that the rate falls back below 24 %. This is without prejudice to any revisions of the reserve, including, if appropriate, of the rate of allowances to be placed in the reserve, taking place as part of the general revision of Directive 2003/87/EC and Decision (EU) 2015/1814 in 2022.

Amendment  11

 

Proposal for a decision

Recital 15 a (new)

 

Text proposed by the Commission

Amendment

 

(15a) The Commission should continuously monitor the functioning of the reserve. Where the Commission finds that the total number of allowances in circulation has increased compared to the last three years and where appropriate, it should make a legislative proposal to amend this Regulation to ensure the proper functioning of the reserve in rapidly and steadily correcting the structural imbalance between the supply and demand of allowances in the market.

Amendment  12

Proposal for a decision

Recital 15 b (new)

 

Text proposed by the Commission

Amendment

 

(15b) Since the objective of this Decision, namely the continuation of the current parameters of the market stability reserve as established pursuant to Directive (EU)2018/410, cannot be sufficiently achieved by the Member States but can rather, by reason of its scale and effects, be better achieved at Union level, the Union can adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Decision does not go beyond what is necessary in order to achieve that objective.


PROCEDURE – COMMITTEE ASKED FOR OPINION

Title

Amending Decision (EU) 2015/1814 as regards the amount of allowances to be placed in the market stability reserve for the Union greenhouse gas emission trading scheme until 2030

References

COM(2021)0571 – C9-0325/2021 – 2021/0202(COD)

Committee responsible

 Date announced in plenary

ENVI

13.9.2021

 

 

 

Opinion by

 Date announced in plenary

ITRE

13.9.2021

Rapporteur for the opinion

 Date appointed

Claudia Gamon

7.10.2021

Discussed in committee

26.1.2022

 

 

 

Date adopted

3.3.2022

 

 

 

Result of final vote

+:

–:

0:

52

13

5

Members present for the final vote

Matteo Adinolfi, Nicola Beer, François-Xavier Bellamy, Hildegard Bentele, Tom Berendsen, Vasile Blaga, Michael Bloss, Manuel Bompard, Paolo Borchia, Marc Botenga, Markus Buchheit, Cristian-Silviu Buşoi, Jerzy Buzek, Maria da Graça Carvalho, Ignazio Corrao, Ciarán Cuffe, Nicola Danti, Pilar del Castillo Vera, Martina Dlabajová, Christian Ehler, Valter Flego, Niels Fuglsang, Lina Gálvez Muñoz, Claudia Gamon, Nicolás González Casares, Bart Groothuis, Christophe Grudler, András Gyürk, Henrike Hahn, Ivo Hristov, Ivars Ijabs, Romana Jerković, Eva Kaili, Seán Kelly, Łukasz Kohut, Zdzisław Krasnodębski, Andrius Kubilius, Thierry Mariani, Marisa Matias, Eva Maydell, Georg Mayer, Joëlle Mélin, Iskra Mihaylova, Dan Nica, Angelika Niebler, Ville Niinistö, Aldo Patriciello, Mauri Pekkarinen, Tsvetelina Penkova, Morten Petersen, Pina Picierno, Markus Pieper, Clara Ponsatí Obiols, Manuela Ripa, Robert Roos, Sara Skyttedal, Maria Spyraki, Jessica Stegrud, Riho Terras, Grzegorz Tobiszowski, Patrizia Toia, Evžen Tošenovský, Marie Toussaint, Isabella Tovaglieri, Henna Virkkunen, Pernille Weiss, Carlos Zorrinho

Substitutes present for the final vote

Jakop G. Dalunde, Francesca Donato, Adriana Maldonado López

 

 


 

FINAL VOTE BY ROLL CALL IN COMMITTEE ASKED FOR OPINION

52

+

NI

Clara Ponsatí Obiols

PPE

François-Xavier Bellamy, Hildegard Bentele, Tom Berendsen, Vasile Blaga, Cristian-Silviu Buşoi, Jerzy Buzek, Maria da Graça Carvalho, Pilar del Castillo Vera, Christian Ehler, Seán Kelly, Andrius Kubilius, Eva Maydell, Angelika Niebler, Aldo Patriciello, Markus Pieper, Sara Skyttedal, Maria Spyraki, Riho Terras, Henna Virkkunen, Pernille Weiss

Renew

Nicola Beer, Nicola Danti, Valter Flego, Claudia Gamon, Bart Groothuis, Christophe Grudler, Ivars Ijabs, Iskra Mihaylova, Mauri Pekkarinen, Morten Petersen

S&D

Niels Fuglsang, Lina Gálvez Muñoz, Nicolás González Casares, Ivo Hristov, Romana Jerković, Eva Kaili, Łukasz Kohut, Adriana Maldonado López, Dan Nica, Tsvetelina Penkova, Pina Picierno, Patrizia Toia, Carlos Zorrinho

Verts/ALE

Michael Bloss, Ignazio Corrao, Ciarán Cuffe, Jakop G. Dalunde, Henrike Hahn, Ville Niinistö, Manuela Ripa, Marie Toussaint

 

13

-

ECR

Zdzisław Krasnodębski, Robert Roos, Jessica Stegrud, Grzegorz Tobiszowski, Evžen Tošenovský

ID

Matteo Adinolfi, Paolo Borchia, Markus Buchheit, Thierry Mariani, Georg Mayer, Joëlle Mélin, Isabella Tovaglieri

NI

Francesca Donato

 

5

0

NI

András Gyürk

Renew

Martina Dlabajová

The Left

Manuel Bompard, Marc Botenga, Marisa Matias

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

 

 


 

PROCEDURE – COMMITTEE RESPONSIBLE

Title

Amending Decision (EU) 2015/1814 as regards the amount of allowances to be placed in the market stability reserve for the Union greenhouse gas emission trading scheme until 2030

References

COM(2021)0571 – C9-0325/2021 – 2021/0202(COD)

Date submitted to Parliament

15.7.2021

 

 

 

Committee responsible

 Date announced in plenary

ENVI

13.9.2021

 

 

 

Committees asked for opinions

 Date announced in plenary

ITRE

13.9.2021

 

 

 

Rapporteurs

 Date appointed

Cyrus Engerer

16.9.2021

 

 

 

Discussed in committee

9.9.2021

13.1.2022

 

 

Date adopted

15.3.2022

 

 

 

Result of final vote

+:

–:

0:

65

20

1

Members present for the final vote

Mathilde Androuët, Nikos Androulakis, Bartosz Arłukowicz, Margrete Auken, Simona Baldassarre, Marek Paweł Balt, Traian Băsescu, Aurélia Beigneux, Monika Beňová, Hildegard Bentele, Sergio Berlato, Alexander Bernhuber, Malin Björk, Simona Bonafè, Delara Burkhardt, Pascal Canfin, Sara Cerdas, Mohammed Chahim, Tudor Ciuhodaru, Nathalie Colin-Oesterlé, Esther de Lange, Christian Doleschal, Marco Dreosto, Bas Eickhout, Cyrus Engerer, Eleonora Evi, Agnès Evren, Pietro Fiocchi, Raffaele Fitto, Malte Gallée, Andreas Glück, Catherine Griset, Jytte Guteland, Teuvo Hakkarainen, Anja Hazekamp, Martin Hojsík, Pär Holmgren, Jan Huitema, Yannick Jadot, Adam Jarubas, Petros Kokkalis, Athanasios Konstantinou, Ewa Kopacz, Joanna Kopcińska, Peter Liese, Sylvia Limmer, Javi López, César Luena, Fulvio Martusciello, Liudas Mažylis, Joëlle Mélin, Tilly Metz, Silvia Modig, Dolors Montserrat, Alessandra Moretti, Dan-Ştefan Motreanu, Ville Niinistö, Ljudmila Novak, Grace O’Sullivan, Jutta Paulus, Stanislav Polčák, Jessica Polfjärd, Nicola Procaccini, Luisa Regimenti, Frédérique Ries, María Soraya Rodríguez Ramos, Sándor Rónai, Rob Rooken, Silvia Sardone, Christine Schneider, Günther Sidl, Ivan Vilibor Sinčić, Linea Søgaard-Lidell, Maria Spyraki, Nils Torvalds, Edina Tóth, Véronique Trillet-Lenoir, Alexandr Vondra, Mick Wallace, Emma Wiesner, Michal Wiezik, Tiemo Wölken, Anna Zalewska

Substitutes present for the final vote

Maria Arena, Marlene Mortler, Susana Solís Pérez

Date tabled

16.3.2022

 


 

FINAL VOTE BY ROLL CALL IN COMMITTEE RESPONSIBLE

65

+

NI

Athanasios Konstantinou, Edina Tóth

PPE

Bartosz Arłukowicz, Traian Băsescu, Hildegard Bentele, Alexander Bernhuber, Nathalie Colin-Oesterlé, Christian Doleschal, Agnès Evren, Adam Jarubas, Ewa Kopacz, Esther de Lange, Peter Liese, Liudas Mažylis, Marlene Mortler, Dan-Ştefan Motreanu, Ljudmila Novak, Stanislav Polčák, Jessica Polfjärd, Christine Schneider, Maria Spyraki#

Renew

Pascal Canfin, Andreas Glück, Martin Hojsík, Jan Huitema, Frédérique Ries, María Soraya Rodríguez Ramos, Susana Solís Pérez, Linea Søgaard-Lidell, Nils Torvalds, Véronique Trillet-Lenoir, Emma Wiesner, Michal Wiezik

S&D

Nikos Androulakis, Maria Arena, Marek Paweł Balt, Monika Beňová, Simona Bonafè, Delara Burkhardt, Sara Cerdas, Mohammed Chahim, Tudor Ciuhodaru, Cyrus Engerer, Jytte Guteland, Javi López, César Luena, Alessandra Moretti, Sándor Rónai, Günther Sidl, Tiemo Wölken

The Left

Malin Björk, Anja Hazekamp, Petros Kokkalis, Silvia Modig, Mick Wallace

Verts/ALE

Margrete Auken, Bas Eickhout, Eleonora Evi, Malte Gallée, Pär Holmgren, Yannick Jadot, Tilly Metz, Ville Niinistö, Grace O'Sullivan, Jutta Paulus

 

20

-

ECR

Sergio Berlato, Pietro Fiocchi, Raffaele Fitto, Joanna Kopcińska, Nicola Procaccini, Rob Rooken, Alexandr Vondra, Anna Zalewska

ID

Mathilde Androuët, Simona Baldassarre, Aurélia Beigneux, Marco Dreosto, Catherine Griset, Teuvo Hakkarainen, Sylvia Limmer, Joëlle Mélin, Silvia Sardone

PPE

Fulvio Martusciello, Dolors Montserrat, Luisa Regimenti

 

1

0

NI

Ivan Vilibor Sinčić

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

 

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