The revision for the fourth phase of EU Emissions Trading System (2021-2030) introduced a number of important changes concerning funding mechanisms in the system. Existing mechanisms - the Solidarity Provision and Article 10c Derogation - were updated, and new instruments - the Modernisation Fund and the Innovation Fund - have been introduced.
The delegated regulation for the innovation fund was adopted in February and eligible member states communicated their decision to (not) use Article 10c derogation by June 30 by publishing a competitive bidding process and a list of small projects. By September 30, Member States also have to communicate their decision with regard to the use of the flexibility to move allowances between the various funds, and the European Commission is expected to put forward its draft implementing act establishing the Modernisation Fund before the end of the year.
The European Roundtable on Climate Change and Sustainable Transition (ERCST), together with the Central European Energy Partners (CEEP), has been working this important topic for over a year. An event was organised last year in September in Brussels, where a paper was presented discussing the questions and issues that will need to be clarified during the implementation phase.
Over the course of 2019, ERCST and CEEP have been working closely with Member States and stakeholders to deepen the understanding of the regional priorities for the use of the funding mechanisms. Four workshops were organised in Poland, Bulgaria, Romania and the Czech Republic; and surveys and interviews were carried out with Member States and stakeholders.