EU ETS: implementation of the funding mechanisms

EU ETS: implementation of the funding mechanisms

In the context of the revision of the fourth phase of EU Emissions Trading System (2021-2030), which introduced a number of important changes to the funding mechanisms in the system, the Central European Energy Partners (CEEP) together with the European Roundtable on Climate Change and Sustainable Transition (ERCST) have organized on 12th of September the conference: EU ETS: implementation of the funding mechanisms. During the event the report: ETS Funds. Manual paper was presented and discussed. The event was a platform for actors from the industry, governments, and NGOs to engage in constructive dialogue on challenges and expectations for the implementation of funding mechanisms.

The revision of EU ETS updates the existing mechanisms – the Solidarity Provision and the option for transitional free allocation “Article 10c Derogation” and introduces new ones: the Modernisation Fund and the Innovation Fund. Also, a certain level of transfer of allowances between different mechanisms is allowed.

Over the year the rules on the functioning of the funding mechanism shall be clarified and the relevant implementing acts shall be adopted by the European Commission and the Member States. During the event, the representatives of DG Clima explained the specific provisions of the directive and clarified certain issues regarding the future functioning of the system and their plans on the implementation process.

The representatives of the power sector and energy-intensive industries have raised the questions concerning the possibilities of funding concrete investments from different funds. They have also elaborated on the unpredictability of revenues derived from the funding mechanisms which are dependent on the price of the EU allowances. Such a situation introduces risks which hinder investment decisions.

There are still open questions about the eligible projects or the governing mechanisms. In the coming months, CEEP will explore these complexities and will organize another discussions on this topic.