The EU ETS has been the cornerstone of European climate policy and has helped to more than halve the industrial emissions since its introduction in 2005. Learning from the long, successful experience of TIC companies in the system, and building on the future challenges and the introduction of EU ETS 2, TIC Council shares its recommendations in this review of EU ETS 1.
The EU ETS has long been a model for other carbon pricing systems. As carbon markets proliferate globally, ensuring coherence between systems is vital. Post-COP29 negotiations under Article 6 of the Paris Agreement have paved the way for increased cooperation among national and regional markets. TIC Council urges the European Commission to pursue greater harmonisation with international carbon markets while upholding environmental integrity
On aviation emissions, even if currently, there is no direct link with CORSIA and EU ETS, we also recommend an eventual inclusion of CORSIA in the EU ETS with a harmonisation of both systems to ensure there are no duplications.
The challenge this harmonisation brings is that each carbon market and program come with their own methodologies. For these, the European Accreditation and Verification rules (AVR) should be promoted and maintained. AVR imposes clear and stringent requirements for accreditation bodies and verifiers to comply with in the EU, ensuring a high level of robustness and good competence for the auditors. Other counties have less stringent requirements, which could endanger the trustworthiness of the system and the level playing field among verifiers, should non-EU verified reports enter the system without adhering to the European requirements.
The inclusion of permanent carbon removals in EU ETS is meaningful and can create incentives for CCUS projects in the EU. Only projects of permanent carbon removals should be introduced. We recommend following the QUALITY criteria of CRCF, as well as its certifications, focusing on single projects (project related schemes). Protection measures like buffers to compensate for a potential leakage should also be included in these projects.
We recommend only to include permanent CCS due to the lack of standardised methodologies for non-permanent removals, which entails a risk of incorrectly labelling products as carbon neutral.
MWI emissions are already included in the EU ETS 1, as well as in the national ETS schemes. The industry is looking at ways to distinguish between fossil- and biogenic-CO2. Currently, the reporting of such emissions is mainly calculation-based, and MWI are looking for technically feasible solutions to measure the share of biogenic CO2 emissions, which are being developed.
Technical solutions for biogenic CO2 measurements must be subject to monitoring and certification requirements (QAL). We recommend including Carbon 14, to ensure that the biogenic origin of the CO2.
CBAM does not cover indirect emissions (scopes 2 and 3). The risk in the current system is that a company reduces its direct emissions (scope 1), but not its indirect ones. This will make CBAM calculations not accurate to actual emissions. Besides, CBAM must be paid for raw materials and simple parts, not for the finished products containing those materials and parts, this entails a high carbon leakage risk for some imported products.
We recommend introducing further controls on circumvention to products covered by CBAM. We also propose the Commission to permanently track the high-risk products, and the ones suspected of circumvention in order to update the CBAM list of products with real-life data from the market.
Read the full response here.
Contact Person Alberto Monje Gama, Sustainability Policy Manager Rue du Commerce 20/22, B-1000 Brussels Tel: +32 498 88 72 23 Email: amonjegama@tic-council.org