Post by CO2 IQ

🚨 🇪🇺 EU ETS Reform Proposals Are Out -> Slower phase-out of free ETS allowances = slower CBAM phase-in 🚨   Pressure has been building up to ease carbon cost burdens for EU industrial manufacturers through European carbon markets.   📢 Today, the European Commission published its reform package for the EU Emissions Trading System (ETS), aiming to better align decarbonization and competitiveness goals (link in comments 👇🏾).   One element of the proposed ETS amendments is an adjustment of the CBAM factor, which would slow down and extend the phase-out of free allowances under both the ETS and CBAM: 🔸After 2027: Slight increase compared to current levels (e.g. from 90% to 91.5% in 2028) 🔸From 2030: Significant slowing of the steep decline (e.g. from 51.5% to 59% in 2030) 🔸From 2034: Extended phase-out period (i.e. 15% compared to 0%) 🔸In 2038: End of free allowances (i.e. reaching 0%).   These changes bring implications for ETS and CBAM: A higher CBAM factor lowers carbon costs by driving: ⬆️ An increase in the number of free emission allowances (EUAs) for installations under the ETS 🏭 ⬇️ A decrease in the number of CBAM certificates required for imported goods 📦 ⬆️ A lower carbon cost bill for ETS allowances or CBAM certificates 💰.   🗓️ These proposals will now move through the EU trilogue process: the Council and Parliament will need to agree before the reforms can enter into force. We expect a hot debate with further changes.   💡 Our full analysis of the ETS reform proposals and their carbon cost implications will follow. Stay tuned here.   #CBAM #EUETS #CarbonPricing #CarbonMarkets #Decarbonization #IndustrialCompliance #ClimatePolicy