The European Commission has presented a package of proposals to accelerate the electrification of the European economy and reform the carbon market. According to Brussels, Europe's dependence on imported fossil fuels has repeatedly caused geopolitical turmoil and continues to undermine the competitiveness of the European economy, BTA reports.
The Commission proposes that electrification in the EU should reach 46% by 2040, which it estimates could reduce fossil fuel import costs by around €260 billion per year.
Lower electricity costs and more clean technologies
Among the main objectives of the proposals is to narrow the gap between electricity prices and fossil fuels, as well as to accelerate the deployment of electricity-powered technologies, including:
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heat pumps;
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electric vehicles;
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batteries.
The EC proposes that member states be given the option to reduce electricity transmission charges for certain categories of consumers, as well as the tax burden on energy-intensive businesses.
According to the Commission, the wider use of smart meters will also help households and businesses optimize their consumption and reduce electricity costs.
Changes to the emissions trading system
Brussels reports that since its introduction in 2005, the EU Emissions Trading System (ETS) has brought in over €270 billion in revenue, which has been reinvested in innovation, clean energy and the modernization of the electricity transmission infrastructure.
The Commission proposes a smoother reduction in allowable emissions by changing the linear reduction factor (LRF):
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3.7% per year for the period 2031-2035;
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1.7% per year for the period 2036-2040
Over €100 billion for decarbonisation
The proposals foresee that the EU will have €100 billion available to reduce carbon emissions in industry.
The Commission proposes that Member States should be obliged to direct at least half of national revenues from carbon trading to investments in clean technologies. According to the EC estimates, this would provide over €100 billion by 2030.
Support for industry and modernisation
The Modernisation Fund will continue to support lower-income countries in the renovation of electricity networks and the transition to cleaner production.
The Commission also proposes:
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the free allocation of emission allowances to companies to continue after 2030, but to be more closely linked to real investments;
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an increase in the value of free allowances for industry by €6 billion by 2030;
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the gradual elimination of free allowances for sectors, covered by the Carbon Border Adjustment Mechanism (CBAM) to be extended until 2038
A more stable carbon market
The EC also proposes a reform of the Market Stability Reserve, which aims to increase predictability for investors, improve market liquidity and limit excessive volatility in carbon prices.