Credit: Freepik.

Update To Emissions Trading System Brings EU One Step Closer To Carbon Neutrality

The Czech Ministry of Environment expects that the country will receive a total of CZK 1.25 trillion for low-carbon investments by 2030. Photo credit: Freepik.

Czech Republic, Dec 23 (BD) – By the end of this decade, European households will pay more for petrol, diesel and gas or coal heating. At the moment, only large CO2-emitting manufacturers are paying for emission allowances in terms of the EU Emissions Trading System (ETS). The system of emission allowances will soon be reflected in transport and gas heating sectors.

Under the current ETS, electricity producers and industries with high energy demands purchase allowances to compensate for their carbon emissions under a “cap-and-trade” principle. Larger polluters pay more. The ETS is estimated to cover 40% of the EU’s greenhouse gas emissions at the moment.

The change in ETS rules was agreed on Sunday by representatives of EU member states and the European Parliament.  

Sectors covered by the ETS must make cuts of 62% by 2030 based on 2005 levels, up from a previous goal of 43%. The deal also aims to make households pay for emissions linked to fuel and gas heating from 2027, but the price is expected to stay capped until 2030.

Individual households will not pay the allowance as such, but its price will be reflected in overall fuel and heating prices. The allowances will be paid by fuel suppliers at the beginning of the supply chain, not by the final customers. The deal includes several safeguard measures that aim to protect the market and consumers from sharply increasing prices.

Funds from the new emission allowances will be transferred to the “Social Climate Fund”, a tool specifically designed to support vulnerable households and businesses impacted by the high energy prices for ecological transport and housing, thermal insulation, renewable energy sources, community energy, and green modernization of heating plants and factories.

The price of allowances per tonne of CO2 emitted reached almost 100 euros this year. On Monday, 19 December, the price stood at 84 euros – a fivefold increase in the last five years.

“The revision of emissions trading will bring the highest amount of money ever for green modernisation. It will support individuals, municipalities, companies and vulnerable groups. It will help mitigate climate change, which causes enormous damage in the Czech Republic,” said the Czech Ministry of Environment on Twitter on Monday. 

By approving the new ETS proposal, the Czech Republic will receive extra funding for low-carbon investments. The Czech Ministry of Environment expects that the country will receive a total of CZK 1.25 trillion by 2030.

The Czech representatives have also negotiated an exception for Czech heating plants. Czech heating plants are entitled to an additional 30% of free allowances if they plan to transition to climate neutrality.

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