European Emissions Trading Systems (EU ETS)

European Panel FederationClimate & EnergyEuropean Emissions Trading Systems (EU ETS)
ETS

European Emissions Trading System (EU ETS)

The EU emissions trading system (EU ETS) is a cornerstone of the EU’s policy to combat climate change and its key tool for reducing greenhouse gas emissions cost-effectively. It is the world’s first major carbon market and remains the biggest one.

The EU ETS:

  • operates in all EU countries plus Iceland, Liechtenstein and Norway
  • limits emissions from more than 11,000 heavy energy-using installations (power stations & industrial plants) and airlines operating between these countries
  • covers around 40% of the EU’s greenhouse gas emissions.

To achieve a climate-neutral EU by 2050 and the intermediate target of an at least 55% net reduction in greenhouse gas emissions by 2030, the Commission is proposing to revise and possibly expand the scope of the EU ETS. The Commission has published an inception impact assessment and launched an open public consultation on the revision of the system.

In the Carbon Leakage List in place for ETS trading years 2013 and 2014, wood-based panels (WBP) were recognised as a sector at risk, and therefore benefited from compensatory certificates. However, WBP was subsequently not included for the period between 2015 and 2020.  The European Commission (EC) decided that wood-based panels producers had received more free emission allowances from ETS than were needed.

This led EPF, its Environmental Working Group and Raw Material Task Force to immediately start advocacy to return to the list as soon as possible, and at the latest for the period 2021 to 2030, known as Phase IV.  A key position paper was prepared and submitted in 2015 asking the EC to reconsider the omission of EPF from the list.

EPF was delighted to see this advocacy deliver results with the publication of the preliminary Carbon Leakage List for the period 2021-2030 in the EU Official Journal of 8 May 2018.  NACE code 1621 (Manufacture of veneer sheets or wood-based panels) is included as one of just 44 sectors, down from 117 in the previous phase.  The European Commission is applauded for this change. It recognises the contribution to the fight against climate change made by wood-based panels, and the threat that producers face as they strive to deliver a low-carbon economy for Europe.