Thread by @Leondegraaf7

Thread: Following today's #FitFor55 package, here's my initial analysis of the #EUETS revision proposal. Long story short: It becomes more difficult to pollute, but sustainable frontrunners are still disadvantaged compared to laggards.

#EUETS target: Increased to -61% by 2030 compared to 2005, which covers industry + power + intra EU aviation and maritime. This is taken from last year's 2030 #ClimateTargetPlan (see pic), which implies that the target for stationary installations (industry/power) is only -64%

Big plus: #EUETS Linear Reduction Factor almost doubled to 4.2% as of 2024 + one-off reduction ("rebasing") of 119 mln allowances. Leads to a big 15%-POINT cut in free allowances (FA). This LRF was a huge battle in the previous reform, so hope it stays.

Big miss: Preventing the Cross Sectoral Correction Factor or CSCF, which would shave off FA for all #EUETS sub-sectors if applied. The famous tiered approach (industry's nightmare in 2015/16) lost to the "strengthened benchmark" option. What does this mean?

First of all, what are #EUETS product benchmarks? They and their main issue are described in the picture, which is taken from the following @CarbonPulse op-ed article: carbon-pulse.com/132901/

"Strengthened benchmarks" mean these benchmarks get a higher maximum annual improvement rate, from 1.6% to 2.5%. The big problem? Big sectors have lobbied the EC in the past to show their technological progress was very small, hence they will get a very low improvement rate.

For example, in the recently published updated benchmark value list for 2021-2025 you see that the Sintered ore benchmark has “improved” from 0.163 t CO2/ton product to 0.157 (3.7% improvement) and the Hot metals benchmark has “improved” from 1,331 to 1,288 (3.2% improvement).

So: The fact that the maximum benchmark improvement is now being set higher does not mean that polluting industries will actually be imposed that maximum improvement, if you lobby hard enough. Highly problematic: #EUETS benchmarks are the basis for how many FA are handed out.

This is exactly the issue with the current product benchmark system. Old technologies are only competing with themselves for FA instead of with newer, cleaner solutions. This is why the benchmark system must be reformed! And this is where the #EUETS proposal brings some hope:

The #EUETS proposal states that the EC wants to make the product benchmark system more technologically neutral and by ensuring equal treatment of installations independent of the technology or production process used. This sounds very promising, but:

It's not entirely clear to me if the new #EUETS benchmark descriptions will allow old and new technologies to compete on their CO2 reduction potential. That's the goal: It shouldn't matter how you produce something (e.g. steel), as long as it's done as clean as possible.

Another big miss: The #CBAM. Will dive into this in more detail later, but: Only phasing out FA for CBAM sectors by 2035 is way too slow to enable a level-playing field with sustainable frontrunners, who hardly benefit from these things while their laggard competitors do. #EUETS

Now over to @pcanfin , @micha_bloss , @BasEickhout and others in the @Europarl_EN to show more vision and make this #EUETS reform work for sustainable frontrunners

Add-on: While transport/buildings are newly proposed #EUETS sectors, a huge polluter missing is Municipal solid waste. Keeping MSW incinerators out of the ETS disadvantages recycling/reuse of waste vs burning. @zerowasteeurope / @JanekVahk explain how: zerowasteeurope.eu/2021/03/eu-ets…