EU closing in on reform of emission trading program

Ongoing talks to revamp the European Union’s greenhouse gas emission trading program are scheduled to resume on June 27 and may conclude later this year. The European Council and the European Parliament are hammering out a revision of the EU Emissions Trading System for 2021–30. The EU has agreed to crank back its greenhouse gas emissions by at least 40% by 2030 compared with 1990 levels. The trading system, launched in 2005, caps the amount of greenhouse gases that energy-intensive industries—including chemical manufacturers—as well as power plants and airlines may emit. Companies buy allowances to cover their emissions and can sell their excess allowances. The recent economic crisis helped lower demand for allowances, leading to a surplus and depressing their prices. The council, which includes heads of government who can commit member states to EU policies, and Parliament are working to reform the system. Their stated goal is to ensure the system provides a cost-effective incentive to businesses for reducing their emissions and to spur the development of low-carbon technology innovations.