EU Emissions Trading System - what, when, who

July 7, 2022

EU is racing to reach an agreement on the EU ETS directive in time for 2023 – Let’s take a look at what has happened so far.

The European Union has now entered Phase 4 of its emissions trading system and it is racing to reach an agreement on the revision of the directive to ensure the amendments take effect in 2023.

In the past few months, we have seen a lot of action from the European Parliament and the European Council, and it is perhaps a good idea to review what has happened and what we should expect in the coming months.

First things first, let’s start with a quick summary of what has happened so far.

The European Commission proposal

Following the presentation of the Commission’s proposal on 14th July 2021, the European Parliament and the European Council started reviewing the proposal. The European Parliament assigned the Committee of Environment, Public Health and Food Safety (ENVI) while the European Council has set up several expert working groups to analyse the proposal.

Action in the European Parliament

The ENVI Committee, having reviewed the Commission’s original proposal, voted to adopt a more ambitious set of goals in relation to the maritime industry in May 2022. A plenary vote took place on 8th June where the proposal was voted down due to dissenting views in the Parliament.

A new plenary vote was set for 22nd June where the European Parliament has officially adopted its position (as shown below) and is now ready to start negotiations with Member states for the final adoption of the Directive.

 

Action in the European Council – Member states

In the meantime, Environment ministers in the European Council have set up various meetings between October 2021 and March 2022 exchanging views and holding policy debates around the revision of the EU ETS.

On 29th June, the European Council adopted their common position on the EU ETS Directive, staying mostly in line with the Commission’s proposal.

 

Whilst we have seen the Parliament push for more ambitious goals for shipping decarbonisation, it seems Member States have not deviated much from the Commission’s proposal. Most notably, Member states have not endorsed the creation of an Ocean Fund specifically targeting shipping decarbonisation. They have however, agreed with the Commission’s proposal that the Innovation Fund could be used to support shipping decarbonisation.

Now that both Parliament and Council have adopted their positions on the EU ETS, trilogue negotiations can begin.

 

We will keep up with upcoming developments and hopefully make this process a little clearer for you as we’re getting closer to the final agreement for the EU ETS Directive.

Factbox ENVI suggestion