ETS revision with direct benefits for rail adopted by European Parliament
The EU Parliament’s plenary session on Wednesday, 22 June, voted in favour of revising the EU Emissions Trading System. In practice, this means that the ETS will include emissions from all transport modes, while its revenues will be distributed as emissions allowances primarily to the greener sectors. In this sense, rail can benefit greatly.
“CER welcomes the utilisation of ETS revenues to boost green transport, including railways. Under the new rules, at least 10 per cent of the revenues generated from the auctioning of allowances will be put towards the development of public transport, in particular, climate-friendly passenger and freight rail transport”, emphasised the Community of European Railway and Infrastructure Companies.
The ETS dates from 2005 but is currently being revised as part of the Fit for 55 package. It works on the ‘cap and trade’ principle, meaning that a cap is set on the total amount of certain greenhouse gases that can be emitted by the installations covered by the system. The cap is reduced over time so that total emissions fall.
Within the cap, installations buy or receive emissions allowances, which they can trade with one another as needed. After each year, an installation must surrender enough allowances to cover its emissions fully; otherwise, heavy fines are imposed. If an installation reduces its emissions, it can keep the spare allowances to cover its future needs or sell them to another installation short of allowances.
Next to the cap and trade principle, the EU wants to introduce a bonus-malus system. How will this work? By enlarging the scope of the ETS, including now most transport modes-rail, road and sea-it will be possible to aggregate revenues that companies pay when emitting more than they should and distribute them evenly to the best performers.
“The Parliament wants to introduce a bonus-malus-system to incentivise best-performers and innovation and reward the most efficient installations in a sector with additional free allowances. The ETS will generate revenues to support the green transition through support to technologies that contribute to energy and resource savings and pollution reductions.”
Additionally, the EU Parliament redefined the targets set for 2030 by the Commission, now looking at a 61 per cent reduction of emissions instead of 63 per cent. The difference might not seem big, but is substantial for the gradual steps needed to reach carbon neutrality. “Today is a big day for the climate. We will reduce four times more GHG emissions per year than we did from 1990 until today. Everybody who invests in climate mitigation will be supported, but those who just want to continue to pollute, will have a hard time,” commented MP Peter Liese.
“It is essential that revenues from ETS be fully utilised to boost climate mitigation and a just transition. Railways today are in need of new physical and digital infrastructures. The completion of the TEN-T network is the perfect opportunity to make railways more competitive and transport greener and we hope that ETS revenues will contribute financially to such goals”, said CER’s executive director Alberto Mazzola.