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Lithuania is in favour of useful changes to the EU emissions trading scheme

2015-04-30

Lithuania accepted compromise proposals on the market stability reserve for the EU greenhouse gas emission trading scheme (ETS) put forward yesterday at the meeting of Permanent Representatives Committee by Latvia which currently holds the presidency of the EU. These proposals included the recommendation that this reserve should be put in operation in 2019.

This date was chosen as a result of negotiations among the EU Member States on the control of excessive emissions trading allowances on the market and the start date of the launch of this reserve. A certain surplus number of allowances set for auctioning would be transferred to this reserve every year. Should there be a deficit of free allowances on the market, the relevant number would be released from the reserve and added to the number of allowances that can be auctioned.

The emissions trading scheme is the main EU climate change policy measure designed for the regulation of greenhouse gas emissions. In the aftermath of the economic crisis and weak demand, the surplus number of emissions available on the market stands at over 2 billion. Therefore, the price of allowances has gone down reducing the incentives of economic operators to invest in measures reducing greenhouse gas emissions and put in place environmentally friendly advanced technologies.

The European Commission came up with the proposal to set up the stability reserve for the ETS market in 2021. Some older EU Member States which are able to provide state aid to the energy-intensive industry want the inefficient ETS to be reformed as soon as possible by setting up the reserve in 2017 and thereby boosting the price of allowances.

The new EU Member States with limited capacity to subsidise the energy-intensive industry agree that the reserve may be set up before 2021 provided, however, that the industry will be compensated for the increase in the price of allowances. This would result in additional revenues to the state budget for allowances sold on the market and additional EU financial instruments for the deployment of pollution abatement techniques in the industry.

Lithuania maintains this position seeking to ensure that the price of allowances is stabilised avoiding its sharp increase. This would enable the industry which is energy intensive to accrue investments and modernise production using financial instruments available at EU and Member State level. This position was welcomed by the representatives of public authorities, Lithuanian Industry Confederation and major Lithuanian industrial companies during an extended meeting which took place on 20 April.

Public Information Division
30 April 2015

Minister of Environment of Lithuania Kęstutis Navickas
Minister of Environment of Lithuania Kęstutis Navickas