This paper looks at the EU Emissions Trading Scheme (ETS) starting point in 2021 and how it affects the ETS phase 4 emissions budget.
In its draft legislation for the reform of the EU Emissions Trading Scheme (ETS), the European Commission proposed that the ETS budget should be calculated as a straight line drawn between the minus 21% ETS target set for 2020 and the minus 43% ETS target set for 2030 (both below 2005 emissions).
EU’s emissions, however, are expected to be much lower than the ETS cap in 2020: at about 38% below 2005 emissions. If the 2020 target is used as the starting point, the new cap will start at a considerably higher level than emissions will likely be in 2021, building oversupply into the new carbon budget right from the start.
To avoid a new surplus CAN Europe is calling for the ETS starting point to be set at actual emissions (average of 2017-2019 emissions) instead of the 2020 target. Lowering the starting point in that way would reduce a potential new surplus by at least 300 million tonnes.
