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ETS should not damage territorial cohesion or put the most vulnerable citizens at risk  

​​​​The revision of the Emissions Trading Scheme is a cornerstone of the EU's strategy to reach climate neutrality by 2050

​​The Emissions Trading Scheme system should not damage territorial cohesion or put the most vulnerable citizens and territories at risk. This was one of the key messages of the 4th Multilevel Climate and Energy Dialogue, an initiative of the European Committee of the Regions to boost exchanges between EU, national and local and regional governments as to improve the EU's energy governance. The dialogue was organised together with the Slovenian Presidency of the Council of the EU and included the presence of 14 Member States.

​​Set up in 2005, the EU ETS is the world's first international emissions trading system. It works on the 'cap and trade' principle. Today's dialogue focused on the benefits and pitfalls of the current system and the prosed revisions, presented by the European Commission on 14 July 2021 as part of the Fit for 55 package. The impact of the revised ETS would vary greatly in each Member State and EU region. The dialogue pointed out at some of the weaknesses of the EU ETS, such as market volatility, hampering external competitiveness and increasing the risk to citizens of energy and mobility poverty. It also underlined its potency as a driver for promoting investments in innovative and low-carbon technologies.

Opening the dialogue, the First Vice-President of the European Committee of the Regions and Member of the Azores Regional Parliament, Vasco Alves Cordeiro (PT/PES) said: "It is more urgent than ever that our climate ambitions and commitment are rooted in multilevel cooperation and active subsidiarity. The ETS must not damage territorial cohesion and must not put at risk the most vulnerable citizens and territories. Europe’s regions and cities have key competences and expertise in the energy and transport sector and must hold an integral role on the EU's path towards climate neutrality. The ETS is a powerful tool to reduce greenhouse gas emissions yet it must balance climate goals with social protection and economic recovery."

The Slovenian Minister of the Environment and Spatial Planning, Andrej Vizjak , emphasized that the EU ETS is a key policy instrument for mitigating climate change and for moving towards a carbon-neutral economy, and highlighted: "Today’s event is a forum where the message of the relevance of the ETS for EU’s pathway towards the green transition must be put across. Keeping in mind that this transition must be a just one, it is important for the representatives of local and regional authorities to be informed and engaged in the process of setting out the implementing legislation that will deliver on our climate goals."

The mayor of Mannheim, Peter Kurz (DE/PES), the CoR rapporteur of the opinion 'Making ETS and CBAM work for EU cities and regions'​, said: "The Emissions Trading System is a driving force behind the ‘Fit for 55’ package. The best way to ensure that this package works in Europe’s cities and regions is by involving local and regional authorities in the introduction of the new emission trading scheme. To ensure that no one and no region is left behind, I proposed to include a regional dimension in the distribution of the Modernisation Fund. Moving towards a low-carbon economy should not be seen as limiting economic growth. The accelerated transformation will also offer economic opportunities, as climate-neutral products and production methods will be a competitive advantage."

From the European Commission, Stefanie Hiesinger, from the private office of Executive Vice-President Frans Timmermans, insisted on the urgent need to include maritime transport in the new ETS and to target buildings and transport in particular, as emissions from these sectors are still increasing. The EC representative stressed that costs would fall on fuel distributors and not citizens, with the social climate fund targeting energy poverty and the EC to increase solidarity allowances and innovation funds.

Background :

On 14 July 2021, the European Commission put forward the 'Fit for 55' package as a response to the heightened ambitions within the EU on climate action. The package, consisting of 14 proposals for new and revised pieces of legislation on climate, environment and energy, revolves around a revitalized approach on carbon pricing as its central element.

The proposal for the revision of the Emissions Trading System underlines the approach that all sectors should contribute to the transition towards climate neutrality and reaffirms the EU 2030 and 2050 climate targets through a stricter curve in carbon prices.

The main questions tackled at the 4th Multilevel Climate and Energy Dialogue on the Emissions Trading System were:

· Is carbon pricing an adequate instrument to drive the European Union towards its medium and long-term climate goals?

· Is the proposed revision of the ETS consistent and coherent with the rest of the 'Fit for 55' package and other EU priorities, such as ensuring a just transition, preserving the European natural capital and promoting sustainable mobility?

· What are the main challenges of the reinforced ETS and how can they be overcome?

· Are the principles of active subsidiarity and multi-level governance adequately represented within the revision of the ETS?

The Multilevel Climate and Energy Dialogue is part of the Green Deal Going Local initiative. This dialogue is the CoR contribution to the implementation of the "Multilevel Climate and Energy Dialogue" as can be found in the Regulation on the Governance of the Energy Union and Climate Action (EU) 2018/1999.

The next meeting of the CoR's Green Deal Going Local working will take place on Thursday 9 December 2021.

David Crous
Tel.: +32 (0) 470 88 10 37

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