On 16 May 2023 the Official Journal of the European Union published the revision of the EU ETS as part of the ‘Fit for 55’ package to align the ETS with the EU’s 2030 aim to reduce greenhouse gas emissions by 55%. More recently, the European Commission announced on 6 Feb 2024, its recommendation for the EU’s 2040 climate target; a 90% net reduction in greenhouse gas emissions compared to 1990 levels with an aim to achieve ‘net-zero by 2050’. This ambition is a full 10% under the net zero that the EU should achieve by 2040 if it is to contribute its equitable share of global climate efforts.

To improve the environmental impact and equity of the EU ETS, this guide identifies 10 key messages for member state level advocacy:

  1. Align the EU ETS with the 2040 climate target, and increase the rate of emission reductions
  2. Make the polluter pay! Speed up the phase out of free allocation of emission allowances to energy intensive industries 
  3. To protect member state revenue the ETS price must remain high enough to trigger emissions reductions – strengthen the market stability reserve!
  4. Expand the ETS to full scope for both aviation and shipping and include non-CO2 impacts for aviation
  5. Carbon pricing alone can not deliver emissions reductions in buildings and transport. Complementary policies are needed to ensure access and affordability of emissions reductions especially for lower income groups 
  6. To make the spending of the Social Climate Fund (SCF) effective, member states must ensure systematic consultation with civil society to effectively target support for lower income and vulnerable groups within the National Social Climate Plan process
  7. Include stricter criteria for spending ETS revenues to ensure that member states support climate action and the just transition, mobilising ETS2 revenue to target support for emissions reductions in buildings and road transport beyond the SCF 
  8. Remove the additional emission allowances that may enter the market from the decommissioning of coal-fired plants in member states
  9. Ensure no more funding of fossil fuel projects under the Modernisation Fund or Social Climate Fund
  10. Divert subsidies for fossil fuels and industrial pollution to fund climate action 
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LifeETX is implemented by a consortium of 10 NGOs working at national and European level