Directive (EU) 2018/410 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments

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Series Details L 76, Pages 3-27
Publication Date 19/03/2018
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Directive (EU) 2018/410 - adopted by the European Union on 14 March 2018 - which amends Directive 2003/87/EC on setting up a scheme for greenhouse gas emission allowance trading (also known as Emissions Trading System, or EU ETS). This is a text with EEA relevance.

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In the context of the efforts undertaken by the European Union to cut greenhouse gas emissions by at least 80% by 2050, the European Council agreed in October 2014 the 2030 policy framework for climate and energy. A centrepiece of this framework is the binding target to reduce overall EU emissions by at least 40% domestically below 1990 levels by 2030. To achieve that target cost-effecitvely, the sectors covered by the EU ETS would have to sharply reduce their emissions. The European Council's vision outlines the main principles to achieve the reduction in the EU ETS.

The Directive creates the necessary legal framework implementing those principles by reviewing the limits within the Emissions Trading System for the period 2021-2030. It introduces new rules for addressing carbon leakage, and provisions for funding innovation and modernisation in the energy sector (Modernisation Fund). The goals should be achieve in combination with the revised Market Stability Reserve (MSR).

A public consultation in the revision of the EU ETS Directive for the post-2020 period was launched on 19 December 2014. The proposal was adopted by the European Commission on 15 July 2015 as part of an energy-related legislative package. The European Parliament adopted its negotiating position on 17 February 2017, followed by the Council of the European Union on 28 February. An informal agreement between the co-legislators was reached on 9 November. This was formally endorsed by the Parliament on 8 February 2018, followed by the Council on 27 February. The Act was signed on 14 March and entered into force on 8 April. National transposition would have to be concluded by 9 October 2019.

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Commentary and Analysis
EUObserver, 15/01/2015: How can the EU's flagship climate tool be saved?
EPRS: Briefing, September 2015: Initial Appraisal of a European Commission Impact Assessment
EurActiv, 23/09/2015: ETS lead MEP: ‘EU’s carbon market is like a car without fuel’
EurActiv, 24/02/2017: EU carbon market at risk of another lost decade
EurActiv, 02/03/2017: ETS reform agreement catches its architect by surprise
EurActiv, 02/05/2017: Emissions trading and the sound of silence
EPRS: At a Glance, January 2018: EU emissions trading system: Post-2020 reform
EPRS: Briefing, May 2018: Post-2020 reform of the EU Emissions Trading System

EurActiv, 15/07/2015: ETS reform: EU tightens screw on ‘carbon leakage’ handouts for polluting industries
EurActiv, 15/07/2015: Poorer EU nations get carbon money for backing 40% emissions cut
Politico, 15/07/2015: Plugging the carbon leak
EurActiv, 08/09/2015: Tory tipped to lead ETS reform in EU Parliament
Politico, 26/01/2016: Climate targets suffer as carbon price slumps
EUObserver, 26/01/2016: EU carbon credits drop below €6
EurActiv, 01/03/2016: ETS reform to quadruple refiners’ carbon costs, industry says
EurActiv, 26/04/2016: MEPs push for 2025 carbon market review to boost climate action
EUObserver, 15/12/2016: MEPs agree on future of emissions trading
EurActiv, 16/12/2016: Parliament demands deeper cuts to industrial emissions
Politico, 07/02/2017: Europe fights to save broken climate fix
The Guardian, 15/02/2017: MEPs approve overhaul of EU carbon emissions trading scheme
EurActiv, 15/02/2017: European Parliament adopts draft reform of carbon market
EUObserver, 16/02/2017: MEPs back limited EU carbon trade reform
The Guardian, 28/02/2017: Reform of EU carbon trading scheme agreed
Deutsche Welle, 28/02/2017: EU agrees on emissions revision
EurActiv, 01/03/2017: EU ministers reach compromise on carbon market reform
EUObserver, 01/03/2017: EU bulldozes through carbon trade reforms
EurActiv, 03/03/2017: Poland challenges EU’s carbon market reform
EurActiv, 09/11/2017: Emissions trading deal fails to impress
EUObserver, 09/11/2017: Emissions trading deal reached after 'isolating' Poland

European Commission: DG Climate Action: News, 19/12/2014: European Commission starts written consultation on revision of the EU Emission Trading System (EU ETS) Directive for post-2020
EUR-Lex: COM(2015)337: Proposal for a Directive amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments
EUR-Lex: SWD(2015)135: Impact assessment
EUR-Lex: SWD(2015)136: Executive summary of the impact assessment
European Parliament: Legislative Observatory: Procedure File for Proposal on enhancing cost-effective emission reductions and low carbon investments; Modernisation Fund
EP: Legislative Train: Revision of the EU Emission Trading System for the 2021-2030 period
European Commission: Fact Sheet, 15/07/2015: Questions and answers on the proposal to revise the EU emissions trading system (EU ETS)
European Parliament: Press Release, 15/12/2016: Environment MEPs for a stronger EU carbon market
European Parliament: Press Release, 15/02/2017: MEPs back plans to cut carbon emission allowances and fund low-carbon innovation
Council of the European Union: Press Release, 28/02/2017: Revision of the emissions trading system: Council agrees its position
European Commission: DG Climate Action: News, 09/11/2017: EU Emissions Trading System: landmark agreement between Parliament and Council delivers on EU's commitment to turn Paris Agreement into reality
Council of the European Union: Press Release, 22/11/2017: Reform of the EU emissions trading system – Council endorses deal with European Parliament
Council of the European Union: Press Release, 27/02/2018: EU Emissions Trading System reform: Council approves new rules for the period 2021 to 2030

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